[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]


                THE STATE OF COMPETITION IN THE WIRELESS
                  MARKET: EXAMINING THE IMPACT OF THE
                 PROPOSED MERGER OF T-MOBILE AND SPRINT
                ON CONSUMERS, WORKERS, AND THE INTERNET

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                                HEARING

                               BEFORE THE

                SUBCOMMITTEE ON ANTITRUST, COMMERCIAL AND 
                            ADMINISTRATIVE LAW

                                 OF THE

                       COMMITTEE ON THE JUDICIARY

                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

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                        TUESDAY, MARCH 12, 2019

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                           Serial No. 116-10

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         Printed for the use of the Committee on the Judiciary

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

               Available via: http://judiciary.house.gov               
            
                                __________

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
44-492 PDF                 WASHINGTON : 2021                     
          
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                       COMMITTEE ON THE JUDICIARY

                    JERROLD NADLER, New York, Chair
               MARY GAY SCANLON, Pennsylvania, Vice-Chair

ZOE LOFGREN, California              DOUG COLLINS, Georgia, Ranking 
SHEILA JACKSON LEE, Texas                Member
STEVE COHEN, Tennessee               F. JAMES SENSENBRENNER, Jr., 
HENRY C. ``HANK'' JOHNSON, Jr.,          Wisconsin
    Georgia                          STEVE CHABOT, Ohio
THEODORE E. DEUTCH, Florida          LOUIE GOHMERT, Texas
KAREN BASS, California               JIM JORDAN, Ohio
CEDRIC L. RICHMOND, Louisiana        KEN BUCK, Colorado
HAKEEM S. JEFFRIES, New York         JOHN RATCLIFFE, Texas
DAVID N. CICILLINE, Rhode Island     MARTHA ROBY, Alabama
ERIC SWALWELL, California            MATT GAETZ, Florida
TED LIEU, California                 MIKE JOHNSON, Louisiana
JAMIE RASKIN, Maryland               ANDY BIGGS, Arizona
PRAMILA JAYAPAL, Washington          TOM McCLINTOCK, California
VAL BUTLER DEMINGS, Florida          DEBBIE LESKO, Arizona
J. LUIS CORREA, California           GUY RESCHENTHALER, Pennsylvania
SYLVIA R. GARCIA, Texas              BEN CLINE, Virginia
JOE NEGUSE, Colorado                 KELLY ARMSTRONG, North Dakota
LUCY McBATH, Georgia                 W. GREGORY STEUBE, Florida
GREG STANTON, Arizona
MADELEINE DEAN, Pennsylvania
DEBBIE MUCARSEL-POWELL, Florida
VERONICA ESCOBAR, Texas

        PERRY APELBAUM, Majority Staff Director & Chief Counsel
                BRENDAN BELAIR, Minority Staff Director
                                 
                                 ------                                

               SUBCOMMITTEE ON ANTITRUST, COMMERCIAL AND
                           ADMINISTRATIVE LAW

                DAVID N. CICILLINE, Rhode Island, Chair
                    JOE NEGUSE, Colorado, Vice-Chair

HENRY C. ``HANK'' JOHNSON, Jr., 	F. JAMES SENSENBRENNER, Jr.,
    Georgia				 Wisconsin, Ranking Member
JAMIE RASKIN, Maryland			MATT GAETZ, Florida
PRAMILA JAYAPAL, Washington		KEN BUCK, Colorado
VAL BUTLER DEMINGS, Florida	        KELLY ARMSTRONG, North Dakota
MARY GAY SCANLON, Pennsylvania		W. GREGORY STEUBE, Florida
LUCY McBATH, Georgia                                  

                       SLADE BOND, Chief Counsel
                    DANIEL FLORES, Minority Counsel
                    
                            C O N T E N T S

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                        Tuesday, March 12, 2019

                                                                   Page

                           OPENING STATEMENTS

The Honorable David Cicilline, a Member of Congress from the 
  State of Rhode Island, Chair of the Subcommittee on Antitrust, 
  Commercial and Administrative Law..............................     1
The Honorable James Sensenbrenner, a Member of Congress from the 
  State of Wisconsin, Ranking Member of the Subcommittee on 
  Antitrust, Commercial and Administrative Law...................     4
The Honorable Jerrold Nadler, Chair of the Committee on the 
  Judiciary from the State of New York...........................     5

                               WITNESSES

John Legere, Chief Executive Officer, T-Mobile
  Oral Testimony.................................................    12
  Prepared Testimony.............................................    14
Marcelo Claure, Executive Chair, Sprint
  Oral Testimony.................................................    22
  Prepared Testimony.............................................    24
Chris Shelton, President, Communications Workers of America
  Oral Testimony.................................................    29
  Prepared Testimony.............................................    31
Gigi Sohn, Distinguished Fellow, Georgetown University Law Center
  Oral Testimony.................................................   144
  Prepared Testimony.............................................   145
Carmen Scurato, Senior Policy Counsel, Free Press
  Oral Testimony.................................................   152
  Prepared Testimony.............................................   154
Carri Bennet, General Counsel, Rural Wireless Association
  Oral Testimony.................................................   209
  Prepared Testimony.............................................   210
Scott Wallsten, President and Senior Fellow, Technology Policy 
  Institute
  Oral Testimony.................................................   215
  Prepared Testimony.............................................   218
Christopher S. Yoo, John H. Chestnut Professor of Law, University 
  of Pennsylvania Law School
  Oral Testimony.................................................   241
  Prepared Testimony.............................................   242

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Statement from the Honorable Doug Collins, Ranking Member of the 
  Committee on the Judiciary from the State of Georgia submitted 
  by The Honorable James Sensenbrenner, Ranking Member of the 
  Subcommittee on Antitrust, Commercial and Administrative Law 
  from the State of Wisconsin for the record.....................    10
Correspondence from The Honorable Pramila Jayapal and Elizabeth 
  Warren to John Legere submitted by the Honorable Pramila 
  Jayapal, a Member of the Subcommittee on Antitrust, Commercial 
  and Administrative Law from the State of Washington for the 
  record.........................................................   252
An article entitled ``Huawei Connects Rural America: Could It 
  Threaten the Country's Most Sensitive Military Secrets from 
  CNN,'' submitted by the Honorable Matt Gaetz, a Member of the 
  Subcommittee on the Antitrust, Commercial and Administrative 
  Law from the State of Florida for the record...................   262
A letter from Frank DiRico, CEO, Viaro Wireless submitted by the 
  Honorable Ken Buck, a Member of the Subcommittee on the 
  Antitrust, Commercial and Administrative Law from the State of 
  Colorado for the record........................................   274
A letter from Colorado Cellular, Inc., submitted by the Honorable 
  Matt Gaetz, a Member of the Subcommittee on the Antitrust, 
  Commercial and Administrative Law from the State of Florida for 
  the record.....................................................   282
A letter from David Erikson, CEO, freeconferencecall.com 
  submitted by the Honorable David Cicilline, Chair of the 
  Subcommittee on Antitrust, Commercial and Administrative Law 
  from the State of Rhode Island for the record..................   300
Statement from George Slover, Senior Policy Counsel, Consumer 
  Reports, and Jonathan Schwantes, Senior Policy Counsel, 
  Consumer Reports, submitted by the Honorable David Cicilline, 
  Chair of the Subcommittee on Antitrust, Commercial and 
  Administrative Law from the State of Rhode Island for the 
  record.........................................................   303
A letter from a coalition of organizations in support of the 
  proposed merger of Sprint and T-Mobile, submitted by the 
  Honorable David Cicilline, Chair of the Subcommittee on 
  Antitrust, Commercial and Administrative Law from the State of 
  Rhode Island for the record....................................   312
Statement from David A. Little, Executive Director, Rural Schools 
  Association of New York State, submitted by the Honorable David 
  Cicilline, Chair of the Subcommittee on Antitrust, Commercial 
  and Administrative Law from the State of Rhode Island for the 
  record.........................................................   315
Statement from Corrina Freedman, Political and Legislative 
  Director, Writers Guild of America West, submitted by the 
  Honorable David Cicilline, Chair of the Subcommittee on 
  Antitrust, Commercial and Administrative Law from the State of 
  Rhode Island for the record....................................   318
Statement from Tony Vargas, State Senator, Nebraska, submitted by 
  the Honorable David Cicilline, Chair of the Subcommittee on 
  Antitrust, Commercial and Administrative Law from the State of 
  Rhode Island for the record....................................   320
Statement from Richard M. Manning, President, Americans for 
  Limited Government, submitted by the Honorable David Cicilline, 
  Chair of the Subcommittee on Antitrust, Commercial and 
  Administrative Law from the State of Rhode Island for the 
  record.........................................................   322
Statement from Grover Norquist, President, Americans for Tax 
  Reform, submitted by the Honorable David Cicilline, Chair of 
  the Subcommittee on Antitrust, Commercial and Administrative 
  Law from the State of Rhode Island for the record..............   324
Statement from Julian Canete, President & CEO, California 
  Hispanic Chambers of Commerce, submitted by the Honorable David 
  Cicilline, Chair of the Subcommittee on Antitrust, Commercial 
  and Administrative Law from the State of Rhode Island for the 
  record.........................................................   326
Letter from the California Hispanic Chambers of Commerce to the 
  Federal Trade Commission regarding the proposed merger of T-
  Mobile and Sprint, submitted by the Honorable David Cicilline, 
  Chair of the Subcommittee on Antitrust, Commercial and 
  Administrative Law from the State of Rhode Island for the 
  record.........................................................   327
Statement from Kent Lassman, Competitive Enterprise Institute, 
  submitted by the Honorable David Cicilline, Chair of the 
  Subcommittee on Antitrust, Commercial and Administrative Law 
  from the State of Rhode Island for the record..................   329
Statement from Pat Fong Kushida, President & CEO, California 
  Asian Pacific Chamber of Commerce, submitted by the Honorable 
  David Cicilline, Chair of the Subcommittee on Antitrust, 
  Commercial and Administrative Law from the State of Rhode 
  Island for the record..........................................   333
Statement from Chip Pickering, CEO, INCOMPAS, submitted by the 
  Honorable David Cicilline, Chair of the Subcommittee on 
  Antitrust, Commercial and Administrative Law from the State of 
  Rhode Island for the record....................................   335

                                APPENDIX

An article entitled ``Enabling opportunities: 5G, the internet of 
  things, and communities of color,'' Brookings, submitted by the 
  Honorable Hank Johnson, a Member of the Subcommittee on the 
  Antitrust, Commercial and Administrative Law for the State of 
  Georgia for the record.........................................   340

                  QUESTIONS AND ANSWERS FOR THE RECORD

Questions for John Legere submitted by the Honorable Ted Lieu, a 
  member of the Committee on the Judiciary from the State of 
  California for the record......................................   368
Responses to Questions from John Legere submitted by the 
  Honorable Ted Lieu, a member of the Committee on the Judiciary 
  from the State of California for the record....................   369
Responses to Questions from John Legere submitted by the 
  Honorable James Sensenbrenner, Ranking Member of the 
  Subcommittee on Antitrust, Commercial and Administrative Law 
  from the State of Wisconsin....................................   370
Responses to Questions from John Legere submitted by the 
  Honorable David N. Cicilline, Chair of the Subcommittee on 
  Antitrust, Commercial and Administrative Law from the State of 
  Rhode Island for the record....................................   373
Responses to Questions from John Legere submitted by the 
  Honorable Ted Lieu, a member of the Committee on the Judiciary 
  from the State of California for the record....................   372
Responses to Questions from Carri Bennet submitted by the 
  Honorable Matt Gaetz, a Member of the Subcommittee on the 
  Antitrust, Commercial and Administrative Law from the State of 
  Florida and James Sensenbrenner, Ranking Member of the 
  Subcommittee on Antitrust, Commercial and Administrative Law 
  from the State of Wisconsin for the record.....................   373

 
 THE STATE OF COMPETITION IN THE WIRELESS MARKET: EXAMINING THE IMPACT 
 OF THE PROPOSED MERGER OF T-MOBILE AND SPRINT ON CONSUMERS, WORKERS, 
                            AND THE INTERNET

                              ----------                              


                       Wednesday, March 12, 2019

                        House of Representatives

               Subcommittee on Antitrust, Commercial and

                           Administrative Law

                       Committee on the Judiciary

                             Washington, DC

    The Subcommittee met, pursuant to call, at 2:00 p.m., in 
Room 2141, Rayburn Office Building, Hon. David Cicilline 
[chairman of the subcommittee] presiding.
    Present: Representatives Cicilline, Johnson of Georgia, 
Raskin, Jayapal, Demings, Scanlon, Neguse, McBath, 
Sensenbrenner, Nadler, Gaetz, Buck, and Armstrong.
    Staff Present: David Greengrass, Counsel; Lisette Morton, 
Director, Policy Planning, and Member Services; Madeline 
Strasser, Chief Clerk; Moh Sharma, Member Services and Outreach 
Member; Susan Jensen, Parliamentarian/Senior Counsel; Amanda 
Lewis, Counsel; Joseph Van Wye, Professional Staff Member; 
Slade Bond, Chief Counsel; Lina Khan, Counsel; Daniel Flores, 
Minority Chief Counsel and Andrea Woodard, Minority 
Professional Staff. Mr. Cicilline. The Subcommittee will come 
to order.
    Without objection, the Chair is authorized to declare 
recesses of the Committee at any time.
    We welcome everyone to today's hearing on the State of 
Competition in the Wireless Market: Examining Impact of the 
Proposed Merger of T-Mobile and Sprint on Consumers, Workers, 
and the Internet.
    Mr. Cicilline. I now recognize myself for an opening 
statement. Today's hearing is an important opportunity to 
examine the State of competition in the wireless industry and 
the competitive effects of the proposed merger of T-Mobile and 
Sprint.
    Over the past century, the telecommunications industry in 
the United States has demonstrated the harms that result from 
monopoly power. By 1948, AT&T's dominance was so entrenched 
that it was widely considered to be a lawful monopoly. Over the 
next 40 years, it grew to become the largest corporation in the 
world, controlling more than 80 percent of the market. It 
earned more than $53 billion in annual revenue and was the 
second largest employer in the United States, behind only the 
Federal Government.
    In 1982, the Justice Department successfully concluded its 
landmark anti-monopoly case against AT&T for blocking 
competition in the telephone service and equipment market. As a 
result, the Bell System was broken into separate telephone 
companies while AT&T's long-distance services were structured 
separately from its device manufacturing services.
    The importance of the breakup of the Bell System cannot be 
overstated. It facilitated an explosion of competition in long 
distance markets, significantly lower prices for consumers, 
improved products, and services, and spurred the creation of 
new jobs.
    Perhaps most importantly for the purposes of today's 
hearing, the competitive pressure resulting from robust 
enforcement also led to the deployment of fiber optic across 
the country, particularly much of the Internet's 
infrastructure.
    Anne Bingaman, the Assistant Attorney General of the 
Antitrust Division, testified before the Subcommittee in 1994 
that AT&T had copper wires across the country until competition 
entered that market, and when it did, Sprint and MCI laid fiber 
optic coast to coast and AT&T, spurred by competition, followed 
them.
    She noted then that there was no question that the speed of 
building the infrastructure for nationwide internet was years 
and years ahead of where it would have been in the absence of 
the breakup of AT&T.
    When coupled with some of the pro-competitive reforms in 
the Telecommunications Act of 1996, such as phone number 
portability, consumers and small businesses saved billions of 
dollars each year while maverick competitors were incentivized 
to enter the market to offer better services and more choice.
    Due largely to a retreat from aggressive antitrust 
enforcement over the past several decades, there are only four 
national carriers today. The proposed merger of T-Mobile and 
Sprint would shrink this market to just three national wireless 
carriers, resulting in the combined company controlling nearly 
a third of the wireless market.
    The merging parties claim that the transaction is necessary 
to deploy the next generation of broadband internet across the 
country and to compete more vigorously with the two largest 
carriers, AT&T and Verizon.
    To their credit, both Sprint and T-Mobile have aggressively 
competed with the larger carriers over the past decade, 
resulting in lower prices and better policies for consumers. 
But, I am deeply skeptical that consolidation is the path 
forward to lowering prices, increasing opportunity, or 
unleashing competition in places around the country where there 
is none today.
    First, the competition that has been driven by Sprint and 
T-Mobile over the past decade has occurred in the absence of 
consolidation, not because of it. Second, nearly a century of 
experience with telephone monopolies has taught us that the 
pressure of competition is critical to building out the 
nation's internet infrastructure and improving quality for 
consumers. Finally, there is mounting evidence that additional 
consolidation in this market would likely give the combined 
company the incentive and ability to raise prices, lower wages, 
and abandon the policies that have benefited consumers over the 
past decade.
    Under both longstanding Supreme Court precedent and the 
horizontal merger guidelines, mergers that significantly 
increase concentration in highly concentrated markets are 
presumed to be illegal.
    It is beyond dispute that this transaction will 
significantly increase concentration in the wireless market far 
beyond the level that the antitrust agencies consider to be 
likely to enhance market power, and because of this reality, 
the only thing preventing the merging parties from raising 
prices, lowering quality, and depressing wages are promises for 
a limited period of time.
    Today's hearing is also an opportunity to examine concerns 
related to the current State of merger enforcement. It has been 
nearly a year since the Federal Trade Commission last 
challenged a merger in court, and since the beginning of the 
Trump Administration the Justice Department's Antitrust 
Division has only challenged one significant merger, AT&T's 
acquisition of Time-Warner.
    Not only did the Antitrust Division lose this challenge, 
but this case has been mired in controversy from day one due to 
the President's shameful attempts to interfere in antitrust 
enforcement.
    Last week, Jane Mayer of The New Yorker reported that the 
President instructed senior White House officials to, and I 
quote, ``get this lawsuit filed'' against the AT&T and Time-
Warner merger following a series of reports suggesting that the 
President seeks to wield the antitrust laws as a political 
weapon to reward friends and punish perceived enemies.
    In response to this explosive report, Chair Nadler and I 
are seeking the production of every communication and document 
related to this case. We must get to the bottom of whether the 
White House has weaponized our antitrust laws to punish enemies 
or reward friends, and we will.
    Most importantly for the purposes of today's hearing, the 
proposed merger of T-Mobile and Sprint is really a critical 
test. Is the Antitrust Division genuinely dedicated to 
promoting competition or does it only oppose mergers when the 
White House tells it to do so?
    Finally, this proposed merger does not occur in a vacuum. 
Working families across the country are struggling to make ends 
meet. Parents lie awake at night wondering how they will be 
able to afford their child's insulin. People work double and 
triple shifts just to afford their health insurance deductibles 
and co-pays for prescription drugs, and for too many families 
having as much as an extra $50 in the bank can be the 
difference between scraping by to the next paycheck or having 
the heat turned off in the middle of a cold winter.
    Decades of consolidation throughout the economy have wiped 
out countless small businesses and hollowed out the middle 
class, resulting in record levels of inequality that have 
undermined social mobility in our country significantly.
    During this period, corporations have converted monopoly 
rents into higher compensation for executives, and in the 
process, driven down wages and made life unaffordable for many 
people.
    As Nobel Prize-winning economist Joseph Stiglitz has 
warned, and I quote, ``We have become a rent-seeking society, 
dominated by market power of large corporations, unchecked by 
countervailing powers, and the power of workers has been 
weakened, if not eviscerated.''
    It is every stagnant paycheck, every surprise medical bill, 
every overpriced and overcrowded flight with hidden fees, every 
trip to the hospital where patients are forced to wait for 
hours and risk personal bankruptcy to receive medical care, and 
every astronomical telephone and cable bill that is accompanied 
by a forced arbitration clause and horrible customer service.
    These are all reminders that America's monopoly problem has 
fundamentally broken our economy and destroyed the American 
dream. We read stories of billionaires buying yachts that are 
furnished like palaces and as large as some elementary schools 
while the brave men and women in uniform who fought for our 
country do not have access to affordable healthcare.
    This economic nightmare is exactly why Democrats promised 
Americans that we would crack down on corporate monopolies 
through a better deal on competition. Ending this moral crisis 
is a top priority for me as Chair of the Antitrust Subcommittee 
and a top priority for House Democrats to keep our promise to 
work for the people, to prevent big mergers that would harm 
consumers, workers, and competition.
    In closing, I thank our esteemed panel of witnesses for 
appearing before us today, and I very much look forward to all 
your testimony.
    I now have the privilege of recognizing the distinguished 
gentleman from Wisconsin, the Ranking Member, Mr. 
Sensenbrenner, for his opening statement.
    Mr. Sensenbrenner. Thank you very much, Mr. Chair, and I 
welcome the witnesses to today's hearing, which will examine 
the Proposed T-Mobile-Sprint Merger and its Impact on the 
Market and Consumers.
    Let me say at the beginning that I am disappointed to hear 
Chair quote a partisan spin on this proposal even before we 
hear the testimony from the witnesses.
    You know, I certainly have not made up my mind on whether 
this proposed merger is in the public interest or not, this 
hearing will shed some light on it, but I do want to say that I 
don't think that antitrust questions should be partisan in 
nature whatsoever.
    I have been on this Committee for 40 years and there are 
very few of these proposals that the Committee has examined 
where Republicans and Democrats have been divided from the get-
go.
    On March 29th, 2018, T-Mobile and Sprint announced a merger 
agreement that undoubtedly will change the telecommunications 
landscape. If approved, this $26.5 billion deal would combine 
the third and fourth largest wireless providers.
    While eliminating a competitor, the merger could put 
companies in a much stronger position to take on AT&T and 
Verizon, which have dominated the marketplace. If combined, T-
Mobile and Sprint hope to improve service, innovate and expand 
their network into underserved and rural areas.
    I look forward to hearing from both CEOs on the implication 
of this merger as on the deployment of 5G. 5G is key to 
improving service with greater coverage, higher speeds, and 
increased added capacity.
    Ensuring that we are at the forefront of this technology 
will provide untold benefits to American consumers and the 
American economy and is important to many Members of the 
committee.
    We will hear today from witnesses who will outline a very 
different picture, one that paints this merger as negatively 
impacting low-income consumers and rural communities. Many 
wireless competitors and consumer advocates believe a more 
concentrated wireless industry will reduce competition, raise 
prices, and result in job losses.
    Under the Communications Act of 1934, the Federal 
Communications Commission is reviewing the merger to ensure 
that it promotes the public interest, convenience, and 
necessity. U.S. Department of Justice and State Attorneys 
General are also reviewing the transaction pursuant to their 
respective authorities.
    While Congress has no formal role in the DOJ or FTC's 
merger review process, hearings like this provide an 
opportunity to ask and debate questions of great importance to 
American consumers, and I look forward to the testimony of the 
witnesses and debate among Members of the committee, and in the 
end wise decisions by DOJ and the FTC that ensure competitive 
future for wireless communications in America.
    I yield back the remainder of my time.
    Mr. Cicilline. Thank you, Ranking Member Sensenbrenner.
    The Chair now recognizes the Chair of the Full Committee, 
the gentleman from New York, Mr. Nadler, for his opening 
statement.
    Mr. Nadler. Thank you, Mr. Chair.
    I appreciate this opportunity to carefully consider the 
impact of the proposed merger of Sprint and T-Mobile on 
competition, consumers, and workers.
    While I do not prejudge the merits of any proposed merger, 
it is clear that this transaction, if approved by regulators, 
would usher in significant changes to the market for mobile 
wireless services.
    Given the fact that 95 percent of American adults own a 
cell phone and 20 percent use a mobile device as their primary 
means of accessing the internet, it is critical that we closely 
analyze any proposed merger with such a wide-ranging impact.
    As independent companies, Sprint and T-Mobile have each 
brought competitive and innovative products to market. These 
products have not only benefited their customers but have also 
benefited the customers of other wireless carriers whose own 
carriers have had to compete with both companies.
    For example, Sprint and T-Mobile's reintroduction of 
unlimited data plans in 2016 resulted in lower monthly bills 
and better internet access for millions of consumers. These 
companies have also provided important services, such as 
competitive prepaid mobile wireless plans, to some of our most 
underserved communities. These prepaid plans offer certain 
customers the ability to purchase wireless broadband and 
wireless cellular services without passing a credit check.
    I applaud both companies for their competitive efforts, for 
their ingenuity, and for serving consumers in every market.
    In considering their proposed merger, however, we must 
determine whether this proposed new combined company with the 
largest share of the marketplace would have less incentive to 
innovate and to compete with other companies.
    I am concerned about any merger that would significantly 
increase concentration in a market that is already highly 
concentrated. There are only four national wireless carriers 
today, AT&T, Verizon, T-Mobile, and Sprint.
    As a result of this transaction, there would be only three, 
each of which would control about a third of the marketplace, 
thereby dramatically altering the competitive landscape.
    Consequently, the combined Sprint and T-Mobile may no 
longer have any market-based incentive to lower prices and to 
offer pro-consumer policies once it becomes as large as the 
other two carriers. This in turn could harm other carriers' 
customers who have indirectly benefited from Sprint and T-
Mobile's competition over the past decade.
    Concerns have been raised about the merger's impact on low-
income consumers who often must rely on cheaper prepaid phones 
for their wireless service. Because the proposed transaction 
would also consolidate the market for these services, it may 
have disproportionately negative effects on low-income 
households.
    This would be particularly harmful in major cities with 
large populations of middle- and low-income people, such as New 
York, which may experience even higher levels of concentration 
in the market for prepaid phones than in other regions.
    For their part, Sprint and T-Mobile offer a variety of 
justifications in support of this merger. They argue that the 
transaction would enable New T-Mobile, as the company would be 
called, to supercharge the market for wireless competition. Its 
increased scale, they argue, would lead to better quality of 
its network and would enable the development of innovative new 
products at dramatically faster speeds.
    Moreover, they believe that the merged company would be in 
a better position to compete with the other wireless giants and 
would push the other companies to offer better services to 
their customers.
    They also anticipate that the new company would expand its 
workforce and would invest up to $40 billion in the first three 
years after the merger. This may lead to the creation of more 
jobs, better policies for consumers, and new competition in the 
broadband marketplace, thanks to faster deployment of a 
nationwide Fifth Generation or 5G wireless network.
    These claimed benefits of the merger would be welcome 
developments for millions of employees and consumers. They 
should be viewed with healthy skepticism, however, in light of 
numerous mergers we have seen in recent years that have made 
economic promises that were ultimately not borne out.
    That is one reason why I introduced the Restoring and 
Improving Merger Enforcement Act, legislation designed to 
prohibit the consideration of spurious unverifiable economic 
efficiencies to justify anticompetitive mergers.
    Merging parties routinely justify anticompetitive mergers 
under the guise of corporate restructuring and other so-called 
efficiencies which are generally code words for widespread 
layoffs and reduced wages and benefits for employees.
    Rather than create more efficient markets, waves of 
consolidation throughout the economy over the past several 
decades have imperiled the financial security of American 
workers and consumers. As a result, employers have immense 
power to reduce the wages, benefits, and economic mobility of 
workers while consumers routinely pay higher prices for goods 
and services than they would in a more competitive economy.
    When combined with the precipitous decline of collective 
bargaining, this massive consolidation has shrunk the middle 
class and has increased income inequality through stagnant 
wages and less economic opportunity.
    Needless to say, I am pleased that State and federal 
regulators are closely scrutinizing this transaction to 
determine what impact it may have on consumers and employees, 
and I appreciate Chair Cicilline holding this hearing today so 
that Members of this Subcommittee may also examine the 
important questions the proposed merger raises.
    I look forward to hearing from our large panel of expert 
witnesses, including the CEOs of both Sprint and T-Mobile, and 
I thank them for their participation, in particular those who 
have rearranged their schedules on several occasions to 
accommodate congressional conflicts that have arisen.
    I yield back the balance of my time.
    Mr. Cicilline. I thank the gentleman.
    I now recognize the Ranking Member for unanimous consent.
    Mr. Sensenbrenner. Mr. Chair, I ask unanimous consent to 
put in the record the statement by the Ranking Member of the 
Full Committee, the gentleman from Georgia, Mr. Collins.
    Mr. Cicilline. Without objection.
    [The information follows:]
     

                    MR. SENSENBRENNER FOR THE RECORD

=======================================================================


                   STATEMENT OF DOUG COLLINS

    Thank you, Chairman Cicilline and Ranking Member 
Sensenbrenner for holding this hearing.
    This nation's communications infrastructure is of paramount 
importance. It helps to bind together America's families and 
communities, it's critical to our economy and it's vital to our 
national security.
    The proposed merger of T-Mobile and Sprint raises 
significant issues for the future of our communications system. 
America is rapidly continuing its shift to primary reliance on 
wireless and fiber-optic infrastructure for its communications 
needs, and T-Mobile and Sprint are two of just four nationwide 
wireless companies serving those needs.
    The proposed merger, moreover, comes precisely as markets 
in the U.S. and abroad begin the transition to the next wave of 
wireless technology--5G. Whether the merger, if approved, will 
help or hinder the fastest, strongest transition to 5G has far-
reaching implications for families, students, small business 
owners, major companies and everyone beyond and in between. It 
is no understatement to say that the proposed merger has 
serious implications including whether the U.S. will continue 
to lead the world in communications innovation and the advanced 
goods and services that depend upon it.
    I expect the Department of Justice's Antitrust Division and 
the Federal Communications Commission to resolve with the 
fullest application of their expertise whether the proposed 
merger meets legal standards for approval. My concern at this 
hearing is that Congress help to elevate the profile of issues 
and explore for the benefit of American families what the 
future consequences of approval or disapproval would be.
    One area I greatly look forward to hearing about is the 
potential this merger could have to help fmprove communications 
across rural America, like in northeast Georgia. Of the four 
national carriers, including T-Mobile and Sprint none are 
serving rural districts like mine well enough. If the merger 
will not improve access, rural America will only suffer more. 
If it will improve access, then welcome relief may be on its 
way.
    Another question is whether Sprint will disappear no matter 
what happens with the merger. There are those who claim that, 
for financial reasons, Sprint will soon no longer be a viable 
national competitor. If that's true, the question could simply 
be whether we go from four to three national competitors 
because of the merger or because Sprint goes into bankruptcy. 
The question may even be whether we go from four to two, 
because eventually, if T-Mobile is left alone in competition 
with AT&T and Verizon, it too will ultimately go under.
    But there are also those who claim that Sprint will be 
financially viable going forward. They assert that, if Sprint 
remains independent, scores of regional competitors who rely on 
its market-leading support of roaming services will help to 
build out a 5G network even faster than the merged T-Mobile and 
Sprint could. They also claim that will be especially true in 
rural areas.
    For the benefit of my constituents, I want to hear 
everything I can today about the potential this merger has for 
positive or negative impact on rural communities.
    I commend the Subcommittee for holding this hearing on the 
proposed merger. I am also delighted that the Subcommittee is 
beginning this term of Congress with two consecutive antitrust 
hearings. Our antitrust jurisdiction is critical and I am eager 
to continue its reinvigoration this term.
    I look forward to each of the witnesses' testimonies and 
yield back the balance of my time.

    Mr. Cicilline. It is now my pleasure to introduce today's 
witnesses.
    Our first witness is John Legere, the Chief Executive 
Officer of T-Mobile. He has been named a Top CEO by Glassdoor 
and was granted the Maverick and Leadership Award by Yale's 
Chief Executive Leadership Institute.
    Before his time at T-Mobile, Mr. Legere served as CEO of 
both Global Crossing and Asia Global Crossing as well as Head 
of Global Corporate Strategy and Business Development at AT&T.
    Mr. Legere received a Bachelor's Degree in Business 
Administration from the University of Massachusetts, a Master's 
Degree in Science as an Alford P. Sloan Fellow at the 
Massachusetts Institute of Technology, and, additionally, he 
received his Master's of Business Administration degree from 
Fairleigh Dickinson University and completed Harvard Business 
School's Management Development Program.
    Our second witness is Marcelo Claure, the Executive Chair 
of the Board of Sprint Corporation.
    Previously, Mr. Claure served as Sprint's Chief Executive 
Officer. He is also currently the Chief Operating Officer at 
SoftBank Group and CEO of SoftBank Group International.
    Mr. Claure was named a Young Global Leader by the World 
Economic Forum as well as one of 42 individuals selected by the 
Carnegie Corporation as part of the Great Immigrants: The Pride 
of America Initiative.
    He received his B.S. in Finance from Bentley University.
    Our third witness is the President of the Communication 
Workers of America, Christopher Shelton.
    He has worked with CWA since 1968, when he was elected a 
shop steward while working for New York Telecom. A native of 
the Bronx, New York, Mr. Shelton joined CWA's National Staff in 
1988 and has served in multiple positions representing locals 
throughout New York, New Jersey, and New England.
    Mr. Shelton was elected the President of CWA at their 75th 
Convention in 2015.
    The fourth witness on our panel is Gigi Sohn, a 
Distinguished Scholar with the Georgetown Law Institute for 
Technology, Law, and Policy, and a Benton Senior Fellow at 
Public Advocate.
    For 30 years, Ms. Sohn has worked to protect and promote 
competition policies that have made the Internet more open, 
competitive, and affordable.
    Ms. Sohn previously served as counsel to Tom Wheeler during 
his tenure as Chair of the Federal Communications Commission.
    She received her B.S. from Boston University and her JD 
from the University of Pennsylvania Law School.
    Our fifth witness is Carmen Scurato, Senior Policy Counsel 
with Free Press.
    Before working with Free Press, Ms. Scurato served as Vice 
President of Policy as well as General Counsel at the National 
Hispanic Media Coalition and as a Project Supervisor with the 
Office of Legislative Affairs at the Department of Justice.
    She received her B.A. from New York University and her JD 
from the Villanova University School of Law.
    Our sixth witness is Carrie Bennet, General Counsel at the 
Rural Wireless Association.
    Since 1987, she has represented primarily rural wireless 
carriers, telephone companies, and cellular carriers before the 
FCC, the courts, and in Congress.
    She is a member of both the Federal Communications Bar 
Association and the American Bar Association and has published 
numerous articles on wireless and rural communications issues.
    She received her B.A. from North Carolina State University 
and her JD from the Columbus School of Law at Catholic 
University.
    Scott Wallsten, the President and Senior Fellow at the 
Georgetown Technology Policy Institute, is our seventh witness.
    An economist with an expertise in industrial organization 
and public policy, his research focuses on competition, 
regulation, telecommunications, and technology policy.
    Mr. Wallsten is also a Senior Fellow at the Georgetown 
Center for Business and Public Policy.
    He received his B.A. in Economics from Washington 
University and his Ph.D. in Economics from Stanford University.
    Our final witness is Professor Christopher Yoo. Professor 
Yoo is a Director at the Center for Technology, Innovation, and 
Competition as well as the John Chestnut Professor of Law, 
Communication, and Computer and Information Science at the 
University of Pennsylvania Law School.
    His research focuses on administrative and regulatory law, 
especially in relation to technology, innovation, and the 
Internet.
    He has also taught at Vanderbilt University School of Law 
where he serves as the Founding Director of the Technology and 
Entertainment Law Program.
    Mr. Yoo received his A.B. from Harvard University and his 
J.D. from Northwestern University.
    We welcome all our incredibly distinguished witnesses and 
thank you for participating in today's hearing.
    Now if you would please rise, I will begin by swearing you 
in. Please raise your right hands.
    Do you swear or affirm under penalty of perjury that the 
testimony you are about to give is true and accurate to the 
best of your knowledge, information, and belief, so help you 
God?
    [A chorus of ayes.]
    Mr. Cicilline. Let the record show the witnesses answer in 
the affirmative. Thank you. You may be seated.
    Please note that each of your written statements will be 
entered in the record in its entirety. Accordingly, I ask that 
you summarize your testimony in five minutes. To help you stay 
within that time, there is a time light on your table. When the 
light switches from green to yellow, you have about a minute to 
conclude your testimony and when the light turns red, it 
signals that your five minutes have expired. So please keep 
that in mind.
    We will begin with Mr. Legere.

                    TESTIMONY OF JOHN LEGERE

    Mr. Legere. Thank you, Chair Nadler, Chair Cicilline, 
Ranking Member Sensenbrenner, and other Members of the 
Subcommittee, for inviting Marcelo, me, and the rest of the 
panel here today.
    I appreciate the opportunity to tell you about the 
tremendous benefits of the proposed T-Mobile/Sprint merger and 
the progress we are making towards making it a reality.
    So, first, what will the merger deliver? It will deliver a 
super-charged un-carrier which can ensure U.S. leadership in 
5G, increase competition, and create American jobs.
    First and foremost, the New T-Mobile will make sure America 
wins the global 5G race. This is so important because 5G will 
unlock new capabilities that will fuel innovation and job 
creation well beyond anything we have seen so far.
    5G will completely transform the way Americans live, work, 
travel, and play. 5G means real-time navigation, downloading a 
movie in seconds, instant language translation, and much more. 
Nearly every American business will be able to use 5G to 
revolutionize how they create and deliver goods and services.
    Best of all, with this transaction, the benefits of 5G 
won't just flow to big cities. Combining Sprint and T-Mobile 
will produce a faster, broader, and deeper network that is 
truly nationwide. It will benefit consumers and businesses 
everywhere, including in rural America. Neither company could 
do this on its own.
    Second, the New T-Mobile will have the capital, scale, and 
network to super-charge competition, unleashing significant 
benefits for all consumers, including keeping prices low. The 
combined company will continue the T-Mobile tradition of 
disrupting the wireless space, and we will disrupt in-home 
broadband with the new wireless mobile and in-home broadband 
options, offering average download speeds of a hundred megabits 
or greater to 90 percent of the United States population by 
2024 and, thus creating a new broadband option for millions of 
Americans who have none and freeing millions from the 
stranglehold of big cable.
    Budget-conscious customers use the most data, as many of 
them rely on their phones as their main point of access to the 
internet. That means they have the most to gain when data costs 
less. New T-Mobile will offer a much-needed new bridge across 
the digital divide.
    Our opponents are wrong when they claim the merger will 
lead to higher prices. In fact, the opposite is true. The 
massive increase in our network capacity and huge reductions in 
our costs to deliver our services will enable the New T-Mobile 
to win customers through lower prices and better services, and 
it is in my business plan to do just that.
    I am so confident that this merger will lower prices that 
we have committed in writing to the regulators that we will 
make available the same or better rate plans as those currently 
offered by T-Mobile and Sprint for the next three years.
    Third, this merger will be a tremendous jobs creator at New 
T-Mobile and across our country. Our merger will be jobs 
positive from day one and going forward. In the first year, we 
will have thousands more employees than the stand-alone 
companies combined. By 2024, we will have 11,000 more 
employees.
    Our critics are wrong about the impacts on jobs.
    I have looked at their arguments and supposed analysis and 
they do not make sense. They ignore the facts. They don't 
account for any areas where jobs will grow, like new customer 
experience centers, enterprise services, broadband and media, 
and network build and integration.
    We have heard this story before. They said we would cut 
10,000 jobs when T-Mobile merged with Metro-PCS. In fact, we 
expanded jobs by tens of thousands.
    Let me say this to every T-Mobile and Sprint employee 
working at one of our stores today: Each of you will be offered 
a job with the New T-Mobile. Make no mistake. Opponents of the 
transaction are fear-mongering about job losses and price 
increases in a desperate effort to maintain the status quo. 
They know that blocking this transaction will only entrench the 
incumbent Big 2 wireless carriers and big cable, and that is 
their goal. Opponents and their backers are terrified of the 
competition that a super-charged un-carrier will bring.
    On the other hand, many have already recognized the 
tremendous benefits of this merger. CFIUS and Team Telecom have 
completed their national security review and approved the 
transaction. Sixteen of 19 State regulatory commissions have 
completed their reviews and found the transaction to be in the 
public interest, and over 200 organizations, companies, 
government officials, and community leaders publicly support 
the transaction.
    I am particularly honored that Congressman Eshoo, 
Congressman Long, and 11 other Members have signed a bipartisan 
letter of support.
    To those that doubt us, I would simply say this: We are the 
un-carrier. My management team and I believe in delivering on 
our promises, and we know if we do not, we will lose the 
credibility and trust of our customers and employees.
    I can promise to you the New T-Mobile will deliver for 
consumers, American workers, and for our country.
    Thank you, and I look forward to answering your questions.
    [The statement of Mr. Legere follows:]

                    STATEMENT OF MR. LEGERE

                          Introduction

    Thank you, Chairman Cicilline, Ranking Member 
Sensenbrenner, and Members of the Committee.
    My name is John Legere. I have been Chief Executive Officer 
of T-Mobile U.S., Inc. since September of 2012. Since becoming 
CEO almost seven years ago, I've been privileged to lead T-
Mobile on its mission to fix a stupid, broken, arrogant 
industry and to redefine how the American consumer views and 
experiences ``wireless.'' As the ``Un-carrier,'' T-Mobile has 
worked to attract customers by fixing a wide range of their 
pain points while ultimately providing consumers better value 
for lower prices. If the merger is approved, I will proudly 
serve as the CEO of New T-Mobile.
    I appreciate the opportunity to be here today alongside 
Marcelo Claure of Sprint to discuss the proposed merger of our 
two companies. New T-Mobile will enable U.S. leadership in 5G, 
deliver significant value and benefits to consumers in all 
corners of the nation, increase competition in wireless and in-
home broadband, and create American jobs. New T-Mobile will be 
able to leverage a unique combination of complementary assets 
to unlock massive synergies to build a world-leading 5G network 
that will deliver unprecedented services and value to all 
consumers, increasingly disrupt multiple industries, and 
enhance the American economy and national security.
    Our proposed merger with Sprint will provide New T-Mobile 
with the added scale and critical spectrum and network assets 
to supercharge our Un-carrier strategy. As a result, we can 
take competition to new levels. We will offer a much faster, 
broader, and deeper network and new services at lower prices 
than either T-Mobile or Sprint could achieve alone. This will 
force our rivals--AT&T, Verizon, and the cable monopolies--to 
improve their services, increase their own capacity, and lower 
prices even further. All American customers will win with lower 
prices and better services!
    When we build our world-class 5G network, we are not only 
going to benefit wireless customers, but also finally bring 
real competition for in-home broadband consumers, including 
rural customers, who are typically stuck with no choices for 
in-home broadband service today. We will bring new competition 
to Big Cable in two ways. Our 5G network gives us the speed and 
capacity to offer an affordable in-home high-speed broadband 
service to millions of American households. And with fiber-like 
speeds across our mobile network, many more Americans will be 
able to ``cut the cord'' entirely and eliminate a separate 
broadband charge--saving hundreds of dollars a year! The 
industry will have to respond, and prices will drop even more!
    Importantly, we will bring these benefits to parts of the 
United States that other larger wireless carriers and cable 
companies often ignore--such as rural America and lower income 
communities. Our 5G network will be nationwide and connect the 
whole country. We will back our commitment to these areas with 
at least 600 new retail stores, five new customer experience 
centers, and 12,000 new employees on the ground in rural areas 
and small towns--communities that need them the most. Our lower 
income customers use the most data because they 
disproportionately rely on their phones to access the internet. 
They have the most to gain when the price of data drops! Urban 
or rural, the merger will build a much-needed bridge across the 
digital divide.
    We aren't stopping there, as our plans include breaking 
into new and emerging lines of business such as enterprise, 
Internet of Things (``IoT''), and video.
    This merger will be a tremendous jobs creator at New T-
Mobile and across the country.
    Certain opponents of our merger with vested interests in 
maintaining the status quo have falsely characterized this 
merger as a job killer. But they have it all wrong: Our merger 
will be jobs positive from day one--and going forward. The 
build-out of our 5G network, investment in new customer 
experience centers, and expansion into new businesses like 
broadband, video distribution, and enterprise services means 
thousands more jobs than the two standalone companies would 
have needed. New T-Mobile will need approximately 3,600 more 
employees in its first year and more than 11,000 more employees 
by 2024 than the standalone companies combined without the 
merger. We recently announced the locations for three of five 
new technologically advanced customer experience centers that 
New T-Mobile will build--one in Sprint's hometown of Overland 
Park, Kansas, one in the greater Rochester area of New York, 
and one in California's Central Valley--each with over one 
thousand new employees.
    On top of increasing competition and adding jobs, this 
merger will also help ensure that the tremendous benefits of 5G 
leadership are realized here in America. The United States led 
the world in 4G and the monumental ecosystem that was built 
around it, spawning companies such as Uber, Snap, and Venmo. 
Our merger creates the opportunity to continue that leadership 
in the 5G world. Nothing short of our global technology 
leadership is on the line.
    New T-Mobile will build the robust, nationwide, secure 5G 
network that will win the race to 5G.
    Neither Sprint nor T-Mobile could do anything close to this 
on their own. And no one else will do it on our accelerated 
time frame if we don't do it together. The benefits of the 
transaction have always been obvious to us. Since we announced 
the merger last April, the evidence is even more powerful today 
than it was then. In the meantime, I have heard what our 
opponents have to say, and I am here today to address those 
concerns directly and explain why they're wrong. We are 
confident that a T-Mobile/Sprint merger will benefit the U.S. 
economy for American workers and consumers and promote U.S. 
technological leadership and our national security.
    Make no mistake, opponents of the transaction are fear-
mongering about job losses and price increases in a desperate 
effort to maintain the status quo. They know that blocking this 
transaction will only entrench the incumbent Big Two wireless 
carriers AND Big Cable--and that's their goal. Opponents and 
their backers are terrified of the competition that a 
supercharged Un-carrier will bring!
    T-Mobile welcomes this Committee's role in providing 
oversight, and I am pleased to answer your questions. First, I 
will provide some further details on the transaction and topics 
of interest.

        Excitement Over the Benefits of the Transaction

    Together with Sprint, we have been working since the deal 
announcement in April to share the tremendous benefits of the 
transaction in every corner of the country. We have also 
provided the evidence to back up our claims so that consumers, 
employees, policymakers, and regulators could make up their own 
minds. We have provided over 25 million pages of T-Mobile 
documents to the U.S. Department of Justice and Federal 
Communications Commission and have had many meetings with the 
staff of both agencies to answer their questions. We've made 
filings on the transaction in 19 states and met with a number 
of State Attorneys General and their staffs. I've also had the 
honor to meet with several Members of this Subcommittee one-on-
one to discuss the transaction's benefits directly. We engaged 
from the beginning with U.S. national security agencies with 
whom both T-Mobile and Sprint have had longstanding 
partnerships. And we've connected with many consumer groups, 
small business organizations, civil rights groups, and other 
important stakeholders in the wireless economy to understand 
their needs and explain the benefits of this transaction.
    It has been a long road, but what we've learned is that 
when workers, consumers, regulators, and policymakers 
understand the facts about the transaction--the details I will 
share with you today--they can understand that together T-
Mobile and Sprint will protect and enhance technological 
leadership in the world, improve the consumer experience and 
consumer welfare, supercharge competition in wireless and 
beyond, and create a jobs engine for the U.S. economy.
    I'll mention just a few important milestones in our 
journey. The Committee on Foreign Investment in the United 
States (``CFIUS'') and Team Telecom completed their national 
security review and approved the transaction. Sixteen of 
nineteen State regulatory commissions (including the District 
of Columbia) have approved the transaction, including most 
recently the New York Public Service Commission, which 
concluded that the transaction is in the public interest. 
Attorneys General Sean Reyes (R-UT) and Hector Balderas (D-NM) 
have written in support, highlighting benefits to rural 
America. Governor Laura Kelly (D-KS) and numerous other State 
officials have expressed support for the transaction. We are 
particularly honored that Congresswoman Anna Eshoo (D-CA) and 
Congressman Billy Long (R-MO) spearheaded a bipartisan letter 
of support.
    Over 200 national and local civil rights, economic 
development, community and business organizations, companies, 
government officials, and community leaders have provided 
public support for the transaction, including: The U.S. 
Hispanic Chamber of Commerce; the U.S. Black Chamber of 
Commerce; the National Hispanic Caucus of State Legislators; 
the National Rural Education Association; the National Puerto 
Rico Chamber of Commerce; and Silicon Harlem, among many 
others. At three public interest hearings in Fresno, Los 
Angeles, and San Diego, California, at least 60 private 
individuals and Members of local community groups came out to 
voice support. And a number of MVNOs--so-called ``virtual'' 
carriers that utilize the T-Mobile, AT&T, Verizon, or Sprint 
networks to offer service--such as TracFone, Ultra Mobile/Mint 
Mobile, Prepaid Wireless Group, and Republic Wireless, support 
the merger because it gives them access to a super 5G network 
that will expand their business opportunities and enable them 
to compete and better serve their customers.
    Several well-respected academics and think tanks have 
published papers that support and extol the transaction, 
including papers on the competitiveness and dynamism of 
wireless markets, the convergence of wireless and wired 
broadband, the importance of 5G for rural economic development, 
and how U.S. leadership in 5G can help close the digital divide 
for the benefit of communities of color.
    I have been encouraged by this tremendous support and 
excited by the opportunity to share our story with all of you.

 U.S. Leadership in 5G is Critical to American Innovation and 
                       National Security

    I will start with the amazing 5G network that New T-Mobile 
will build by combining T-Mobile and Sprint. This merger will 
help ensure that the tremendous benefits of 5G leadership are 
realized here in America. The stakes are high--nothing less 
than preserving our edge in innovation and maintaining our 
security.
    Just look at 4G. The U.S. started rolling it out nationwide 
before almost any other nation, getting the technology into 
hands of innovators and entrepreneurs, and today 99.7% of 
Americans are covered by 4G LTE. The result: America and our 
innovators led the global mobile economy for the last decade. 
Uber, Snap, Venmo, and Instagram are all products and 
businesses built largely or entirely on the 4G mobile web. 
Furthermore, many of today's global internet leaders like 
Google, Facebook, and Amazon rose to prominence by leveraging 
the transition to mobile here in the U.S. first. Analysts 
estimate this early leadership generated billions in economic 
value and millions of new jobs here in America.
    As the next generation of wireless technology, 5G is a game 
changer. The capacity, speed, and latency of 5G are truly 
revolutionary and far beyond what the most advanced 4G network 
can support today. 5G will enable superior capacity, faster 
data rates, and much lower latency, as well as energy 
efficiency leading to longer battery life and the capability to 
connect a greater number of devices. Our 5G network will 
deliver fiber-like data speeds, low latency for real-time 
interactivity, more consistent performance and user experience, 
and massive capacity for unlimited data to support things like 
4K video streaming, smart cities, real time translation, online 
gaming, and other exciting applications that cannot be served 
across a substantial number of users by 4G. This will transform 
the way Americans live, work, travel, and play. Nearly every 
business in America will use 5G to revolutionize how they 
create and deliver goods and services. New T-Mobile's 5G 
network will serve as a platform for ensuring that the 5G 
ecosystem of innovation and technological development occurs in 
the United States.
    Just as we experienced with 4G, the countries who are first 
to deploy broad, robust 5G will enjoy a critical global edge in 
innovation, development, and deployment of related technologies 
and products, such as the IoT, autonomous vehicles, advanced 
telemedicine, and entertainment.
    The United States is not alone in pursuing this goal. The 
United States must win the 5G race against China and do so in a 
way that protects our national security. 5G will be the means 
to connect and control phones, computers, cars, and 
appliances--nearly every device you can imagine. It is 
therefore imperative that U.S. 5G networks are secure. Winning 
the 5G deployment race is critical to assuring this security. 
It will give U.S. companies more influence as the standards 
that define 5G technology continue to develop. It will also 
bolster trusted network equipment suppliers who must compete 
against Chinese companies such as Huawei and ZTE. And it also 
ensures that cutting-edge U.S. innovation around 5G occurs in 
the United States, which is as critical for our security as it 
is for our economy. The flood of innovation that 5G will 
unleash must occur in our country.
    Although 5G leadership is critical to America's future, the 
United States is falling behind in the 5G race. Other countries 
have shown that they will do whatever it takes to win the race 
to 5G and are making substantial commitments to support this 
goal. China has taken a global lead in the race, thanks to 
industry momentum and government support. China's 5-year 
economic plan specifies $400 billion in 5G-related investment, 
and China Tower alone has added nearly ten times the number of 
5G sites than all U.S. companies combined. Since 2015, the U.S. 
has underspent China in wireless infrastructure by $8 to $10 
billion. It is critically important that we turn the tide and 
recommit to American leadership in 5G.

    The Combination of T-Mobile and Sprint Ensures U.S. 5G 
                           Leadership

    Time is of the essence. Only accelerated deployment of 
robust, nationwide 5G will preserve our edge. Only New T-
Mobile's 5G network will do it!
    This transaction ensures that America secures 5G leadership 
today and in the future. The combination of T-Mobile and Sprint 
accelerates deployment of a world-leading, national, broad and 
deep 5G network in the United States, built upon a set of 
perfectly complementary assets of the two companies. T-Mobile 
possesses low-band (600 MHz) spectrum, which is particularly 
useful for providing coverage across broad geographic areas, 
but has limited capacity, and high-band (mmWave) spectrum, 
which is useful primarily for outdoor applications and in 
targeted densely populated areas. By contrast, Sprint lacks low 
and high-band spectrum, but possesses substantial mid-band (2.5 
GHz) spectrum, which has more limited coverage capabilities 
than low-band spectrum but provides deep network capacity. 
Combining T-Mobile's low-band and high-band wireless spectrum 
with Sprint's mid-band spectrum will allow for both extremely 
broad coverage and deep network capacity, providing the optimum 
scenario for a robust, nationwide 5G network. New T-Mobile will 
have the complete portfolio of spectrum necessary to offer top 
speeds and massive capacity to dense urban areas. At the same 
time, New T-Mobile will also bring robust 5G service to rural 
areas that will otherwise lag far behind. No other U.S. company 
currently has the available spectrum necessary to deploy 5G 
both broadly--truly nationwide coverage to nearly all 
Americans--and deeply--with the high speeds and massive 
capacity that 5G applications will require. Only this merger 
brings these assets together to enable a supercharged, 
nationwide 5G network!
    New T-Mobile will be able to invest significantly more in 
its 5G network than either company could standing alone. 
Through cost savings and efficiencies largely derived from 
combining the two networks and the scale we will achieve, New 
T-Mobile will be able to invest nearly $40 billion over the 
next three years to build out and enhance its network and bring 
the company into the 5G future. How? Combining with Sprint will 
give us the resources to enhance and build the vast, dense 
network of cellular towers and high-capacity antennas that will 
make full use of these assets for 5G. Today, T-Mobile has 
64,000 macro sites across the Nation and Sprint has 46,000. Of 
the combined 110,000 towers, New T-Mobile will integrate 
approximately 11,000 sites from the Sprint network into the T-
Mobile network and add 10,000 new sites, creating a much 
denser, higher capacity network that can carry substantially 
more traffic at the same time than either company could on its 
own. The breadth of the new cell site infrastructure, with 
approximately 84,000 macro cell sites blanketing the country, 
will allow New T-Mobile to provide reliable signal strength 
levels to far more areas than either standalone company.
    When compared to the standalone networks in 2021 and 2024, 
New T-Mobile will more than double 5G capacity by 2021, and 
nearly triple 5G capacity by 2024--more than eight times the 
capacity of T-Mobile and Sprint's networks combined today. This 
increase in capacity will dramatically decrease our cost of 
delivering each gigabyte of data, which will be translated into 
lower prices for customers. Indeed, our business plan 
anticipates that prices will continue to decline over the next 
six years, and an analysis of our merger by a leading economist 
concluded that building the nationwide 5G network will also 
provoke competitive responses from Verizon and AT&T and result 
in as much as a 55 percent decrease in price per gigabyte and a 
120 percent increase in data supply for all wireless customers 
across the industry than would happen without this merger.
    In terms of speed, within two years of closing, the New T-
Mobile network will be able to offer data speeds five times the 
speed of what the standalone T-Mobile 5G network would be able 
to offer. By 2024, the speeds will reach a point of fiber-like 
capabilities, averaging over 450 Mbps--that's 15 times the 
speed of today's T-Mobile network--and the New T-Mobile network 
will virtually eliminate the constraints consumers currently 
experience in congested environments, allowing for near 
instantaneous sharing and downloading of content from almost 
any location. This will transform the way Americans live, work, 
travel, and play by facilitating an enormous variety of IoT 
applications, as well as the full spectrum of connected 
devices. In sum, compared to today's T-Mobile network, New T-
Mobile will have 8 times the capacity and 15 times the speed by 
2024.
    In terms of coverage, New T-Mobile's 5G network will be 
truly nationwide. In fact, by 2024, over 290 million Americans 
(90 percent) will have access to average data speeds over 100 
Mbps through New T-Mobile--higher speeds than many homes have 
through wired broadband service today. Neither Sprint nor T-
Mobile on their own would be able to offer anything like that 
coverage. Even more incredibly, two-thirds of the country will 
have lightning fast 500 Mbps average data speeds by 2024--data 
speeds that neither Sprint nor T-Mobile will be able to offer 
any consumers on their standalone 5G networks for the 
foreseeable future.
    Even better, the broad geographic reach of New T-Mobile's 
5G network will finally bring rural communities into the mobile 
broadband era. Rural communities that lack access to quality 
broadband can stagnate economically, as skilled workers take 
their talents to urban centers to fully participate in today's 
digital economy. Combining T-Mobile's and Sprint's spectrum 
allows us to close the gaps in rural broadband access and 
increase outdoor wireless coverage to reach 59.4 million rural 
residents, or 95.8 percent of the estimated 62 million rural 
residents.
    Opponents of the transaction have claimed that T-Mobile and 
Sprint do not need to merge to roll out 5G. That misses the 
point. To be clear, we are not saying we cannot get to 5G 
without Sprint. What we are saying is that together, we can 
build a world class 5G network with breadth and depth well 
beyond anything we could do alone. So, while it is true that T-
Mobile and Sprint have already announced 5G plans, the 
standalone plans to deploy 5G are not even close to comparable 
to the network New T-Mobile can and will build.

The Combination of T-Mobile and Sprint Safeguards U.S. National 
                        Security for 5G

    This transaction will also empower New T-Mobile with the 
network, resources, and spectrum to drive U.S. leadership in 
5G, safeguarding our networks. New T-Mobile's incredible, 
industry-leading 5G network will be built and operated right 
here in the United States by an American company with American 
management. Our New T-Mobile 5G network will not only be the 
most robust, but it will also be the most secure.
    T-Mobile and Sprint have engaged extensively in partnership 
with the U.S. Government for many years. This partnership will 
continue with New T-Mobile into 5G, setting us apart from other 
U.S. wireless carriers in providing visibility into our 5G 
suppliers and ensuring our network remains safe and secure. As 
the global 5G deployment leader, New T-Mobile will have the 
most recent and up-to-date security framework with the U.S. 
Government of any wireless carrier. And as I mentioned at the 
outset, CFIUS and Team Telecom have approved this transaction 
after an extensive national security review.
    Opponents of the transaction have set up a shadowy group 
that refuses to disclose its donors and lobs allegations that 
this transaction will allow Huawei and ZTE into U.S. networks. 
That's false, and they know it is. Let me be clear--we do not 
use Huawei or ZTE network equipment in any area of our network. 
Period. And we will never use it in our 5G network.
    New T-Mobile will buy network equipment only from trusted 
network equipment suppliers with a strong security track record 
in the United States. By accelerating deployment of true, 
robust nationwide 5G, New T-Mobile will provide a critical lift 
to these trusted network equipment vendors--Huawei's 
competitors--protecting the 5G supply chain for the United 
States and our allies.
    Combining T-Mobile and Sprint will create a world-leading 
robust, broad, and deep nationwide 5G wireless network unlike 
anything either company could do alone and well before anyone 
else can do it. The United States will have 5G with or without 
this merger. The question is whether America will lead or 
follow. As the Un-carrier, we want to lead! Our merger with 
Sprint will be the catalyst to do that.

   The Creation of New T-Mobile Will Be Better for Consumers

    New T-Mobile will have the capital, scale, and network to 
supercharge competition and drive a full-on competitive 
response from AT&T and Verizon as well as newer players. The 
competition will still be far, far larger than us, but the 
merger will allow us to upend their lock on the market like 
never before. The combined company will continue the T-Mobile 
tradition of disrupting the wireless space, but we won't stop 
there. We will disrupt broadband, enterprise, and video as 
well. This increased competition in wireless and other areas 
will also lead to more innovation. This deal is exciting and 
transformative for American consumers!
    At T-Mobile, we are serious about the potential to grow, 
disrupt, and deliver new solutions and alternatives to 
consumers from one end of the country to the other. Being a 
maverick is in my DNA and T-Mobile's DNA, but it is also 
central to our successful business strategy and to the business 
plan of the combined company. As we build out our 5G network 
and expand into new services, we will need to grow our customer 
base. That means keeping the customers we've fought hard to win 
and attracting new customers with great quality and prices, and 
more innovative offerings. That's why two core assumptions of 
our business plan for the New T-Mobile are that prices will go 
down and output--data usage by customers--will increase. That's 
what makes this merger fundamentally different from one 
designed to restrict consumers' choices, reduce supply, and 
raise prices. Business success is based on increasing 
competition, not reducing it!
    First and foremost, the merger will increase competition in 
wireless. Our opponents claim that the merger will lead to 
higher prices, but this couldn't be further from the truth. I 
want to reiterate, unequivocally, that New T-Mobile rates will 
NOT go up. Rather, our merger will ensure that American 
consumers will pay less and get more.
    Greater capacity means our network can handle many more 
devices with greater capabilities at the same time everywhere 
in the country. It's like building a new stadium with three 
times as many seats--we will have the incentive and ability to 
bring more people in the door than ever before to fill up the 
seats. Our existing customers won't be enough to use all that 
extra capacity. We will have enormous economic incentives to 
bring new customers in to fill up the network. How will we do 
that? By lowering our prices, improving our products, and 
offering better service. Indeed, as capacity goes up, the price 
per gigabyte goes down, so we will not only be incentivized to 
add customers, but to do so at lower prices. The business plan 
for New T-Mobile calls for lower prices to win more customers. 
This isn't just for any segment of customers--this capacity 
dividend will be passed along to all customers, including our 
wholesale and prepaid customers. All American customers will 
win with lower prices and better services!
    In fact, we are so confident that this merger will give 
consumers more for their money that we are willing to put our 
money where our mouth is. Last month T-Mobile made a commitment 
that I stand behind: New T-Mobile will make available the same 
or better rate plans as those offered by T-Mobile or Sprint for 
three years following the merger. Let me be clear: We are 
committed to making the same or better plans available at 
current or lower prices. We will not raise prices, and we are 
happy to put it in writing!
    But that is only part of the story--that's just what New T-
Mobile will do. AT&T, Verizon, Comcast, Charter, and the other 
players won't stand still as they will be forced to react fast 
or lose even more customers to New T-Mobile! When we lower our 
prices, they will have to lower their prices. When we improve 
quality, they will have to improve quality. The standalone
    T-Mobile has shaken up the industry and caused the big 
players to take notice, but the competitive response that we 
can force from them will be nothing like what we can do as the 
New T-Mobile. When we innovate to offer new products and 
services, they will have to do the same. This competitive 
response will be game changing, and we can't wait to see the 
kind of ecosystem of innovation and technological development 
that will occur right here in the United States. When we force 
Verizon and AT&T to respond, we're helping more than just our 
customers, we're helping all wireless customers across the 
country. We've submitted economic analysis to the FCC and DOJ 
demonstrating that American consumers will pay roughly 55 
percent less per gigabyte of data in 2024 as a result of the 
transaction. All consumers, including lower-income and our 
diverse customer base, will benefit from increased competition 
and lower prices.
    One thing I am particularly excited about is that New-T-
Mobile will bring new competition beyond wireless to in-home 
broadband--a market where tens of millions of consumers have 
few if any choices. Consumers hate their cable and wireline 
broadband choices, but today, they rarely have somewhere else 
to turn. With the spectrum and infrastructure assets of the 
combined companies, New T-Mobile's 5G network will give them a 
better option and a reason to ``cut the cord.'' By 2024, we 
will be able to deliver mobile wireless data speeds averaging 
over 100 Mbps, speeds that will equal or exceed wireline 
broadband to nearly 90 percent of the U.S. population, giving 
tens of millions of consumers a new mobile wireless alternative 
to their current fixed and wired broadband provider, allowing 
them to cut the broadband cord. Cutting the cord will offer 
enormous savings to consumers. Today, a consumer will typically 
pay around $80 a month for wired in-home broadband service. 
Cutting the cord will lead to $960 in annual savings for 
consumers.
    Further, the merger enables New T-Mobile to offer its own 
in-home wireless broadband solution (New T-Mobile Home 
Internet), and we project that we will sign up 9.5 million 
households nationwide for in-home broadband service by 2024--
New T-Mobile will be the fourth largest in-home internet 
service provider in the country based upon current subscriber 
shares, and a real competitive force in that market segment. 
Our economic analysis shows that by 2024 American consumers 
will save as much as $7 to $13 billion annually in lower 
broadband prices from the new alternatives and competition this 
merger will create.
    While some opponents of the merger have argued that this 
merger will hurt lower-income or budget-conscious consumers, 
that is 180 degrees wrong! Budget conscious consumers have the 
most to gain from the combination of T-Mobile and Sprint! 
Remember, the whole point of this transaction is to give 
consumers more for less--that is exactly what budget-conscious 
consumers want. That's why we love those customers at T-Mobile. 
They demand the best product at the lowest prices possible. 
They keep us sharp, so we keep the competition sharp. That's 
what we do, and what we will continue to do under the merger--
only bigger and better. All customers of New T-Mobile will 
benefit from the transaction because they will all be on the 
same great network and benefit from the same massive increases 
in capacity and dramatic decreases in the costs of delivering 
our service.
    Budget-conscious customers, including those on prepaid 
plans, will benefit the most from increased capacity and 
improved quality of the network. Those customers rely far more 
on mobile data than our other customers. They often lack a 
fixed broadband connection and use their phones as their 
primary or sole connection to the internet. Prepaid customers, 
like all of New T-Mobile's customers, will benefit from New T-
Mobile's LTE and 5G improvements at no added cost. A faster, 
deeper, and broader network from New T-Mobile is exactly what 
they need! And for those that do have broadband today, $960 in 
annual savings from cutting the cord is a massive dividend that 
we will deliver. New T-Mobile is going to keep all of the great 
prepaid brands our customers love from both T-Mobile and 
Sprint--great choices like Metro, Boost, and Virgin will 
remain, in addition to those our competitors offer.
    We will also continue to offer Lifeline services, which is 
a program that helps low- income consumers afford phone and 
broadband service. You have my commitment on this: Barring 
material changes to today's Lifeline program, New T-Mobile is 
committed to continuing to offer Lifeline service indefinitely. 
But it gets even better: New T-Mobile's expansive 5G network 
will allow Lifeline services to be offered in many places where 
Sprint had no coverage. And all Lifeline subscribers will be 
able to take advantage of the same incredible New T-Mobile 
network as other subscribers.
    New T-Mobile will also be able to compete in wireless 
market segments that T-Mobile and Sprint rarely serve today. 
For example, AT&T and Verizon currently dominate enterprise 
services, or wireless services for business and government 
customers. Despite best efforts, neither Sprint nor T-Mobile 
has been able to make in-roads into AT&T and Verizon's nearly 
90 percent share of the enterprise space. T-Mobile has only a 
very small share of the business market segment (including 
small businesses) today, and only an estimated 4 percent share 
of the large enterprise and government portion of the segment. 
Going forward, New T-Mobile will have the capacity and 
resources to be a disruptor in the enterprise space, and we 
will have every reason to compete hard for that business by 
innovating, offering better service, and lowering prices. Right 
now, AT&T and Verizon dominate that market. Armed with more 
scale and network capability, New T-Mobile will inject more 
competition and innovation into the Enterprise market.

                  Better for American Workers

    T-Mobile is an amazing company to work for. I am proud that 
we are rated a top place to work by many organizations, 
including among many other accolades being recognized among the 
``Best Places to Work'' by employee crowd-sourced website 
Glassdoor.com and for the eleventh consecutive year, being 
named one of the World's Most Ethical Companies by Ethisphere 
Institute.
    Our employees are motivated and energized by the success of 
the company. They are proud Magenta heroes, all of whom are 
owners and invested in the company. Our employees are also 
diverse, reflecting who we are and who our customers are. We 
have won many kudos for our leadership in the area of diversity 
and inclusion. In 2018 alone, Forbes named T-Mobile a ``Best 
Employer for Diversity''; we were honored as one of the ``Best 
Places to Work for Disability Inclusion'' by the U.S. 
Department of Labor's Disability Employment Initiative; and we 
were named the ``Best-of-the-Best Corporation for Inclusion'' 
by the National LGBT Chamber of Commerce. We were also honored 
by Military Friendly as one of the ``Nation's Top Military 
Friendly Employers''; we were named the ``Top 30 Best Employers 
for Latinos'' by Latino Leaders Magazine; and we received a 
perfect score on the Human Rights Campaign Corporate Equality 
Index.
    I am proud that this transaction will grow the number of T-
Mobile employees so even more people will experience our 
terrific teams and culture. Unlike many transactions, our 
merger will be jobs positive from Day One and in the future. 
From 2019 forward there will be more employees at the New T-
Mobile than the standalone companies combined. This is because 
New T-Mobile will spend nearly $40 billion to combine spectrum, 
sites, and assets and to develop its business over the next 
three years. We will need to hire thousands of employees to 
combine the networks and deploy 5G, to extend the Un-carrier 
customer care model to a wider subscriber base, and to support 
growing services like in-home broadband.
    New T-Mobile's business plan shows that New T-Mobile will 
employ 3,600 more employees after year one, and over 11,000 
more employees by 2024, than the standalone companies combined. 
This is a result of approximately 600 new stores located to 
serve rural customers and small communities and five new 
technologically advanced customer experience centers that will 
implement the company's innovative ``Team of Experts'' customer 
care model. These stores and customer experience centers will 
create over 10,000 new American jobs. In fact, we will offer a 
job with the New T-Mobile to every single employee of T-Mobile 
and Sprint working in one of our retail stores.
    T-Mobile's history shows that we may end up hiring even 
more people than we expect. When we acquired MetroPCS in 2013, 
we expected that MetroPCS's employee count would stay about the 
same. Flashing forward to today, over 20,000 more people work 
in support of the MetroPCS brand than when the transaction 
closed. The same team that integrated MetroPCS into T-Mobile 
will lead the effort to seamlessly integrate T-Mobile and 
Sprint, and we can expect a similarly successful transition. We 
know we will grow jobs, not reduce them. We will need every 
hand on deck to build a world-leading 5G network and bring new 
competition to AT&T, Verizon, and the Cable giants.
    Communications Workers of America (``CWA'') has said that 
this transaction will lead to nearly 30,000 job losses across 
the United States--more than the total number of Sprint 
employees today! Well, I've looked at their study. With all due 
respect, it's pure hogwash. The merger does the opposite of 
what CWA claims--it grows jobs, not eliminates them. How does 
CWA come up with a different answer? Well, it's easy if you 
ignore the facts. For example, their analysis doesn't account 
for any areas where jobs will grow--like in new customer 
experience centers, enterprise services, broadband and media, 
and network build and integration. And we've heard this story 
before: CWA predicted that T-Mobile would cut 10,000 jobs when 
we merged with MetroPCS. Today, over 20,000 more people have 
jobs working under the Metro banner than before that merger! 
CWA was completely wrong then, and they are wrong now.
    Beyond T-Mobile, the innovation and growth fostered by the 
acceleration of broadly deployed 5G networks, which the 
transaction will instigate, will add hundreds of thousands of 
jobs to the U.S. economy. A study we have submitted to the FCC 
shows that New T-Mobile will stimulate economic growth 
contributing to more than 33,700 additional jobs over the five-
year study period. CTIA predicts that the United States will 
add millions of new jobs if we win the race to 5G, and this 
transaction will put America in the pole position. We are 
excited to be a part of that growth, spurring our suppliers to 
hire more workers as we rely on them to turn our investments 
into a better, faster 5G network.

     New T-Mobile Must and Will Deliver on Its Commitments

    No one except a few self-interested critics disagrees that 
the United States has to lead in 5G and that creating a more 
effective competitor for Verizon and AT&T is better for 
consumers and the economy. But some have argued that this 
merger will not deliver on what we are promising. I could not 
disagree more. We are the Un-carrier. If we broke faith we 
would lose our loyal customers and destroy the future of our 
brand. I want to assure you that we would never do this. My 
management team and I believe in delivering on our promises, 
and we know if we do not, we will lose credibility and the 
trust of our customers.
    Everyone at T-Mobile has put too much blood, sweat, and 
tears into this brand and philosophy to abandon our Un-carrier 
ways, and our customers are committed to us for it. It matters 
to us, it matters to consumers, and it works for our 
shareholders. We fully understand that being successful in the 
evolving telecommunications marketplace requires that New T-
Mobile continue being an aggressive disruptor that challenges 
the status quo. If we changed, we'd run the risk of losing the 
confidence of our customers and losing our position of brand 
strength in the marketplace--and it would clearly cost us 
paying customers. These people came to us because we offered 
something different from the other guys. They would abandon 
us--and I wouldn't blame them--if we started acting like AT&T, 
Verizon, or a hated cable company.
    Our business plan and our future success are centered 
around building a world class 5G network for everyone and 
delivering more to consumers for less. We have a history of 
delivering on our promises, and we have no plans of changing 
that now. New T-Mobile will deliver on the benefits--a robust, 
deep 5G network, increased competition, lower prices for higher 
quality, and increased jobs! We will keep true to who we are 
and deliver for consumers and for our country.
    It's who we are at T-Mobile--but delivering more for less 
is also great business! Accelerated, industry-leading, robust, 
nationwide 5G deployment is the foundation of New T-Mobile's 
business plan. New T-Mobile's business plan also projects 
aggressive share increases--taken from the industry leaders 
AT&T and Verizon--through its accelerated, enhanced 5G 
deployment. New T-Mobile will be able to attract new customers 
by delivering more data for the same or less dollars on a 
world-class 5G network and bringing new competition to 
broadband, enterprise, and video. New T-Mobile's success 
depends on being a stronger, more aggressive competitor! T-
Mobile has committed to shareholders that it will rapidly 
integrate the networks and deploy industry-leading 5G, and they 
have staked billions of dollars on this happening.
    That's why we are happy to put our money where our mouth is 
and make clear commitments on prices and jobs. We know we can 
deliver, as New T-Mobile planned to do it anyway!

                           Conclusion

    The New T-Mobile will enable U.S. leadership in 5G and 
bring tremendous benefits for consumers, American workers, and 
the economy as a whole. Only this merger, combined with our 
winning Un-carrier strategy, can get us there. As we build out 
our 5G network and expand into new services our plan is simple: 
Keep the customers we've fought hard to win and win new 
customers with great quality, lower prices, and more innovative 
offerings. Only the New T-Mobile, with the track record and DNA 
of the Un-carrier, can actually make that a reality.
    Thank you for the opportunity to speak today. I look 
forward to your questions.

    Mr. Cicilline. Thank you, Mr. Legere.
    Mr. Claure is now recognized for five minutes.

                  TESTIMONY OF MARCELO CLAURE

    Mr. Claure. Thank you.
    Chair Cicilline, Ranking Member Sensenbrenner, and Members 
of the Subcommittee, it is truly an honor to be here, and I am 
grateful for the opportunity to speak to you.
    I would like to take this opportunity to explain why 
Sprint's proposed merger with T-Mobile will be great for the 
American consumers, will be great for Sprint employees, and, 
more importantly, is going to be great for our country.
    I will go into details in a moment but before I do so, I 
want to tell you a little about me. First, I am an immigrant. I 
immigrated to the United States as a young man from Bolivia. I 
had very little money. I went to a small but great university 
in Boston and I received a priceless education.
    Second, I am an entrepreneur. After I graduated, I founded 
a company called Brightstar. I started selling phones out of my 
car and I gradually grew Brightstar into the largest mobile 
phone distribution and supply chain company in the world. We 
worked hard. We grew to over $10 billion in. sales and we had 
thousands of employees all over the world. I am most proud that 
we made Brightstar the largest Hispanic-owned company in U.S. 
history.
    In 2014, I sold my business Brightstar to SoftBank. After 
that, I immediately became Sprint CEO. At that time, Sprint, a 
proud Kansas company, was near financial ruin. In 2013, the 
company had lost over $5 billion and in the previous 10 years 
Sprint had lost over $25 billion, and we had approximately $31 
billion in debt. A great company with tens of thousands of jobs 
across the U.S. was at risk.
    Beginning in 2014, we undertook a massive and painful 
transformation of the company. We worked very hard from the 
ground up. We reduced our expenses by close to $6 billion 
through cost reductions, employee layoffs, and some unwanted 
transfers of jobs overseas. We didn't want to, but we had to do 
that to save Sprint.
    Today, Sprint is no longer in financial dire straits, but 
we still do face serious challenges. Despite our success, we 
are unable to fix our remaining challenge, the quality of our 
network. We cannot fix our network because of our poor 
financial situation and our lack of low band spectrum.
    Because of our network quality issues, Sprint still 
struggles to attract lots of customers and many customers that 
we acquire today leave at a faster pace than our competitors. 
Customers today are not willing to sacrifice quality.
    Today, the U.S. wireless market has become a duopoly. 
Verizon and AT&T has close to 70 percent market share and they 
control over 93 percent of the cash flow generated in our 
industry. As a result, there is no way that we can invest and 
be able to compete at the same level.
    Today, America and the world are at a technological 
inflection point. Over the next few years, 5G, a new standard 
of connectivity, will completely change the way we connect, but 
Sprint doesn't have the resources to build a nationwide 5G 
network to provide the necessary competition against the AT&T 
and Verizon duopoly.
    We estimate ourselves that we need at least $20 to $25 
billion just to have 5G in our limited coverage area and 
because we aren't generating any cash flow, the only way to pay 
for this will be to raise more debt and to pay for that debt we 
have to raise our prices. We could no longer be the price 
leader.
    The only company that can build the world's best 5G network 
is a combination of Sprint and T-Mobile and we can only do this 
if this merger is approved. As a combined company, we are 
committed to invest nearly $40 billion over the next three 
years to build the world's best 5G network with nationwide 
coverage.
    How can we do this together? It is simple. It is a marriage 
of two necessary and complementary 5G pieces. Sprint has high-
capacity spectrum which it acquired over many years. T-Mobile 
has broad national coverage spectrum. It is capacity plus 
coverage together that will allow us to build the most advanced 
network covering every network, every corner of America in 
urban, suburban, and rural areas.
    Sprint cannot do this alone and T-Mobile cannot do it 
either. We need each other to succeed. We cannot take lightly 
the fact that America needs to lead the world in 5G. China has 
made it a priority to win the 5G race. They are investing 
billions of dollars. When a country has the best network with 
the latest technology, it brings massive economic stimulus, 
explosive job growth, and a new wave of entrepreneurs.
    America's the land of innovators and disrupters. Let's keep 
it this way. My story validates this. Letting another country 
take 5G leadership away from the U.S. is going to cause 
irreparable damage. This is an opportunity of a lifetime.
    In addition, as you heard John, we are committed to lower 
prices. When we merge our two companies, we are going to create 
eight times the network capacity that we would have on our own. 
We will have to beat AT&T and Verizon on prices to fill this 
new capacity. This makes financial sense. It is good for 
business but, more importantly, it is our commitment.
    Lastly, it is true that most mergers do not create jobs. 
This merger is the opposite. This is a growth story. This new 
company will create new jobs, blue-collar and white-collar 
jobs, jobs in urban, suburban, and rural America. We will need 
a skilled network of engineers, construction crews, enterprise 
sales teams, call center jobs that we are going to bring back 
from overseas, and new sales reps for the new stores we are 
opening.
    I can't thank you enough for allowing me to speak today. As 
I mentioned, I am grateful to this country. As an American 
entrepreneur, I hope the merger is approved. I look forward to 
answering your questions.
    Thank you.
    [The statement of Mr. Claure follows:]

                    STATEMENT OF MR. CLAURE

    Chairman Cicilline, Ranking Member Sensenbrenner, and 
Members of the Subcommittee, thank you for the opportunity to 
appear today to share my perspective on why this merger will be 
good for American consumers, good for Sprint employees, and 
good for U.S. technological leadership and the next generation 
of entrepreneurs.
    This is a critical time in the evolution of the wireless 
industry, and it is a particularly critical time for the 
customers, employees, and shareholders of Sprint. I have spent 
my career driving innovation and competition in the wireless 
industry. I served as Sprint's CEO from August 2014 until May 
31, 2018, when I transitioned to my current role as Sprint's 
Executive Chairman. I am also the Chairman Emeritus of CTIA, a 
trade association representing the U.S. wireless communications 
industry, and I am expected to serve on the Board of the New T-
Mobile following the completion of the merger.
    I know John Legere will be elaborating on his vision for 
the new company and all that he hopes to achieve. For my part, 
I would like to focus on why joining with T-Mobile now 
represents the best opportunity for Sprint to continue to be a 
force for competitiveness and innovation in the industry. I 
also want to explain the considerations that led us to this 
merger.
    It is no secret that in recent years, Sprint has had to 
chart a course through daunting obstacles. Over the last 
decade, the company had lost over $25 billion. For all the 
talent and work of our employees, our path was simply not 
sustainable.
    I am proud of what Sprint has done to stabilize itself and 
to put us in position to seize the important opportunity that 
we have today to address some of those longstanding challenges. 
Sprint is currently in the fifth and final year of its ``Sprint 
Now'' plan to turn around the company. We made difficult but 
necessary changes that have enabled us to cut billions of 
dollars in costs, improve our networks, and do better at 
attracting and retaining subscribers. In 2017, Sprint became 
net income positive for the first time in 11 years, and we 
achieved positive metrics across several other financial 
performance measures. Today, we are a more stable company 
financially than we have been in a very long time, and that 
financial stability has enabled us to embark on new, much- 
needed investments in our network aimed at trying to catch up 
with technological innovation in our industry. We have also 
been able to undertake initiatives such as the 1Million 
Project, which gives mobile devices and free high-speed 
internet access to high school students who don't have reliable 
connectivity at home. I am thrilled that this program will be 
continued under the New T-Mobile.
    Sprint's employees rightly take pride in all that we have 
accomplished together and are optimistic about the future. But 
as CEO and now Executive Chairman, I am acutely aware of what 
it has taken to get us to this point and the challenges that 
lie ahead. Achieving financial stabilization required us to 
reduce our network investment to historically low levels and to 
shrink the size of the company. Sprint's employee headcount 
fell from 40,000 in 2011 to 30,000 in 2018, a 25 percent 
decrease that was a painful but necessary step to stabilize our 
financial position. We also face an extremely high debt burden, 
with nearly $40 billion in total debt as of the end of calendar 
year 2018. And we have offered aggressive subscription 
promotions in an attempt to gain scale, creating challenges for 
our ability to make additional investments.
    Even with all of this effort, we still are unable to spend 
at parity with Verizon and AT&T, much less catch up to their 
previous investments. Our scale presents significant 
challenges. Because AT&T and Verizon have significantly more 
subscribers than Sprint, they have and can continue to spread 
network costs over a much larger customer base, resulting in a 
far lower cost per subscriber for a given level of capital 
spend. As a result, we continue to face difficult questions 
about how best to attract additional customers, improve our 
network, and find ways to challenge the two dominant players in 
the wireless market, AT&T and Verizon.
    There is an urgent need for us to answer the questions 
about our future because the wireless industry today is at an 
inflection point. It is poised to deploy the next leap forward 
in wireless technology--the fifth generation of wireless 
service--called 5G. Sprint wants to be a leader in this leap 
forward, but our plan anticipates a limited 5G build over time 
that will lack broad coverage. Given the characteristics of our 
mix of spectrum, our comparatively smaller scale, and the size 
of the capital expenditures involved, Sprint will be able to 
deliver 5G only in limited areas, focusing on population-dense 
metropolitan areas. Consequently, Sprint as a standalone 
company cannot fully seize the tremendous opportunity that 5G 
creates, much less match what a merged Sprint and T-Mobile 
could do together as a competitor and innovator.
    It is important to understand how our plans for 5G in the 
absence of a merger will necessarily be limited by our spectrum 
portfolio, lack of scale, and resource constraints. In 
particular, our limited low-band spectrum cannot provide a 
basis for launching a ubiquitous coverage layer for 5G, and 
building ubiquitous nationwide 5G coverage using only Sprint's 
2.5 GHz spectrum would be impractical and economically 
infeasible. To be sure, Sprint's 2.5 GHz spectrum will deliver 
very high speeds and support substantial capacity where we are 
able to deploy it, but due to the propagation characteristics 
of 2.5 GHz spectrum, it would not provide a blanket of coverage 
outside of major metropolitan and suburban areas. Moreover, 
rolling out this more limited 5G network would require Sprint 
to invest $20-$25 billion in the next four years.
    Although subscribers in certain major cities will benefit 
from this roll-out, others will not, nor will we be able to 
truly unlock the power of 5G for innovation and 
entrepreneurship.
    Given these difficulties, I believe Sprint can contribute 
most effectively to the rollout of the next generation of 
wireless services--with all of the consumer and economic 
benefits that it entails--by combining our assets and know-how 
with T-Mobile. That is what makes me so excited about this 
merger. Through this transaction, the combined company will be 
able to build a transformative 5G network in America and unlock 
the promise of 5G faster and for more customers than either 
company could on a standalone basis. America and the world are 
racing to be the first to create the next generation of 
wireless technology, and the advantages of being a first mover 
cannot be overstated. As you will hear today, this merger will 
allow the combined company to dramatically accelerate the 
promise of nationwide 5G in the United States, deliver better 
performance and value to our customers, and create new jobs and 
opportunities for American workers.

        I. What the Transaction Means for the Race to 5G

    U.S. companies are in a race for 5G leadership, and the 
stakes could not be higher. A robust and ubiquitous 5G network 
will provide customers with incredibly fast speeds and massive 
capacity, and will create an ecosystem where the best creative 
minds can develop applications and uses to benefit consumers. 
An independent analysis by Accenture concludes that the United 
States is positioned to invest $275 billion in 5G, creating 
three million jobs and adding $500 billion to our economy. This 
merger will accelerate that investment.
    This is not just about faster wireless service for our 
subscribers--it is about ensuring that the United States leads 
in the next generation of innovation, which will rely on the 
massive capacity that 5G can unleash. The possible use cases 
for 5G include wearables, smart buildings, smart cities, smart 
agriculture, and safer self-driving cars. 5G will also include 
applications we can only imagine.
    The impact of the 4G/LTE deployment helps illustrate how 
critical it is for the United States to win the race to 5G. 
That generation of technology ushered in companies such as Uber 
and Airbnb. Indeed, it helped create the entire ``on-demand'' 
economy--new businesses and types of jobs that simply didn't 
exist before 4G. America led the world in the deployment of 4G. 
As a result, the United States got the benefit of the jobs and 
increased economic productivity that it facilitated. Much of 
the technological innovation enabled by 4G, and many of the 
companies built using that innovation, were U.S. companies--
creating new U.S. jobs. An analysis by Recon Analytics 
concluded that, by leading when the market evolved to 4G a 
number of years ago, the United States boosted annual GDP in 
2016 by nearly $100 billion and resulted in a stunning 84% 
increase in wireless-related jobs in just a three-year period 
(2011-2014).
    Winning the race to 5G will require massive new investment 
and the right combination of spectrum. As John will describe in 
greater detail, the New T-Mobile has committed to spend nearly 
$40 billion--far beyond what Sprint has been able to spend in 
recent years or what it could spend alone--to achieve this 
world-class network and to increase its retail footprint to 
market this new technology, creating thousands of U.S. jobs 
directly and indirectly.
    It is important to understand that the promise of 5G lies 
not just in better and faster performance from mobile devices. 
The New T-Mobile will have the speed and capacity to substitute 
in many areas for in-home broadband--that is, the primary high-
speed internet connection consumers use at home--including in 
areas that currently have few or no options for reliable in-
home broadband, finally creating real competition in these 
areas. As a result, the new technology will enable the combined 
company to increase broadband coverage into more rural areas, 
along with improved signal quality and increased network 
capacity in places where neither company can profitably do so 
on its own. In short, the New T-Mobile will generate 
significantly improved and expanded services to unserved and 
underserved rural areas and create real choice for consumers.
    The blazing speed and enhanced capacity of the New T-
Mobile's 5G network will enable it to offer consumers and 
businesses more choices and cost savings. This improved 
performance is especially important to our prepaid consumers 
and those on a tight budget for whom their mobile wireless 
connection is increasingly their best and, in some cases, their 
only reliable connection to the internet. The New T-Mobile's 5G 
network will also serve as a platform for new video options, 
including, but not limited to, video programming offered by the 
New T-Mobile itself.

         II. What the Transaction Means for Competition

    For years, Sprint has recognized the challenges posed by 
the fact that it competes in an industry dominated by two main 
players: Verizon and AT&T. Eight years ago, my predecessor Dan 
Hesse explained to the Senate and the House Judiciary Committee 
why a proposed merger between AT&T and T-Mobile would have made 
our industry less competitive. At that time, AT&T and Verizon 
together had two-thirds of the market, and the proposed merger 
would have taken a key disrupter off the field, leaving the 
market dominated by two behemoths. That merger did not go 
forward, because the government recognized that it was not in 
the public interest to let one of the two biggest providers get 
even bigger.
    But despite the substantial competitive efforts of Sprint 
and T-Mobile over the past eight years, AT&T and Verizon's grip 
on the market is just as strong today. They still together hold 
two-thirds of the market. And they have increasingly found ways 
to use their scale to cement their advantages rather than to 
compete vigorously with others in the marketplace. A huge and 
increasingly insurmountable gap remains between Sprint and both 
AT&T and Verizon. The merger today is critical to disrupting 
the marketplace and weakening the iron grip these giants have 
had on our industry. Even after the merger, the New T-Mobile 
will still be third in market share and will still be dwarfed 
by AT&T and Verizon in market capitalization. But it will be a 
much stronger competitor and a truly disruptive threat to the 
two giants' longstanding dominance. As part of the deal 
negotiations, executives from Sprint and T-Mobile extensively 
discussed the future of the combined company, and it became 
clear we share a common vision.
    For both Sprint and T-Mobile, this transaction is about the 
opportunity to create a better product for consumers than 
either company could achieve independently, continuing to offer 
innovative services and consumer value, and ultimately becoming 
the best wireless carrier in the United States. By joining 
forces, our two companies will have an opportunity to go head-
to-head with the giants and to make the marketplace much more 
competitive and innovative. In turn, this will force AT&T and 
Verizon to accelerate and become more ambitious in their own 5G 
plans.
    The network that the New T-Mobile will be able to offer 
would transform the industry. Combining the complementary 
assets of both companies will enable a network that will offer 
unmatched coverage, capacity, and quality--both for current LTE 
customers and for the future 5G network that the New T-Mobile 
will be able to deploy. The combined network will surpass the 
quality of the networks offered by Verizon and AT&T, giving 
consumers more and better options than they have today.
    The transaction provides tremendous synergies, estimated at 
about $43 billion, and also provides much-needed economies of 
scale. The synergies and scale will allow the New T-Mobile to 
make the investments necessary to achieve its vision. Building 
and maintaining a national wireless network requires billions 
of dollars in capital expenditures and operating expenses each 
year. The synergies and scale of the combined company will 
create economic incentives for the New T-Mobile to build a 
world-class network, and to expand the geographic reach of its 
network to more Americans.
    In addition, the combined company will be focused on 
continuing the disruptive ``Un-carrier'' actions that have 
become synonymous with the T-Mobile brand. Led by John and T-
Mobile's Mike Sievert, and drawing on the best that both T-
Mobile and Sprint have to offer, the management team will be 
second-to-none. John and Mike have a vision for the New T-
Mobile as a disruptive player in the industry and a force for 
innovation. This will be exciting for all the New T-Mobile 
employees. And as a prospective member of the Board of 
Directors of the New T-Mobile, I am eager to be part of the 
combined company and help realize that vision.
    Finally, it is important to appreciate that in addition to 
AT&T and Verizon, the wireless industry is increasingly seeing 
competition from a growing number of companies from other 
sectors with different business models, including Comcast, 
Charter, DISH, TracFone, and Google. These large, well-
capitalized competitors are pushing into wireless because, just 
as we do, they see untapped potential for success if they are 
able to deliver better results to customers.

         III. What the Transaction Means for Americans

    Simply put, this transaction will bring benefits all across 
the country--in urban, suburban, and rural America. The 
combined company will deliver a far superior network, 
delivering tremendous value to consumers. Together, the New T-
Mobile can supercharge the wireless industry with innovation, 
disruption, and an obsessive dedication to our customers. These 
benefits will be felt in several areas:
    4G LTE. In the near term, the combined company will offer 
better 4G LTE services. The combined network will be anchored 
on the existing T-Mobile 4G LTE network and augmented with 
contributions from Sprint's network to improve coverage, 
consistency, speed, and capacity, with low income, black, and 
Hispanic customers among those who would benefit the most. More 
than 37 million Sprint devices are compatible with T-Mobile's 
LTE spectrum and can be migrated to the new network, and the 
number of customers who can access this improved 4G LTE network 
will only increase over time.
    5G. Together, as I have discussed, Sprint and T-Mobile will 
be the first to deliver a nationwide 5G network with unmatched 
breadth and depth. They will be able to do this faster than 
either could hope to achieve as standalone companies. In 
particular, Sprint and T-Mobile have complementary spectrum 
holdings that, when combined, will be perfect for 5G.
    As independent entities, both companies would deploy 5G on 
their available spectrum, and, as a result of the spectrum they 
hold, each company's 5G network would have deficiencies. 
Sprint's planned 5G holdings are in mid-band spectrum, 
specifically the 2.5 GHz band. A rollout of truly nationwide 
coverage on this spectrum would require too many cellular 
radios to be economical or practical, and therefore Sprint's 
independent 5G network would have coverage gaps. T-Mobile's 
planned 5G spectrum holdings, on the other hand, are primarily 
in low band spectrum, specifically in the 600 MHz band. Signals 
sent over this spectrum travel far, making it ideal for 
extending geographic coverage. However, T-Mobile has a fixed 
amount of spectrum for 5G, so it will have very limited 
capacity, and the network will quickly get congested during 
those times when customers most want to use it.
    By bringing these resources together, the merger will 
create conditions for both nationwide coverage and massive 
amounts of network capacity, allowing for a 5G user experience 
that is robust and ubiquitous. While others currently advertise 
what they claim to be a 5G network, with coverage and capacity 
deficiencies noted in the fine print, the New T-Mobile will be 
the first to deliver truly mobile and nationwide coverage. 
Being faster to develop a ``true 5G'' network will help ensure 
that America will lead the development of the 5G ecosystem, 
which will be a significant boon for the American economy. If 
America can lead in 5G the way that this country led in 4G, it 
will benefit not only American consumers, but also all of the 
American companies that will develop the products, 
applications, and tools that will bring 5G to consumers across 
the world.
    Lower Prices and Cost Savings. As we have shown in the 
analyses we have submitted in support of the merger to DOJ, the 
FCC, and State regulators, the New T-Mobile will have powerful 
incentives to offer low prices to consumers in order to utilize 
the huge increase in network capacity that the transaction will 
make possible. The vision that John and Mike have for the New 
T-Mobile is that of a ``supercharged maverick,'' with the scale 
and resources to make a significant impact on the wireless 
marketplace for the better. This means the combined company 
will continuously look for ways to offer more for less, so it 
can grow its subscriber base and improve value propositions for 
American consumers.
    Critically, low income consumers will particularly benefit 
from these developments. These customers tend to use more 
mobile data and therefore will especially benefit from the 
increased capacity and improved service quality the New T-
Mobile will provide--as well from the fact that the New T-
Mobile's speed and capacity will give more consumers the option 
to ``cut the cord'' and rely on their mobile plans for internet 
access.
    Jobs. One of the things that excites me most about this 
merger is that it will enable us to add employees in the United 
States and to bring jobs that have moved offshore back home. I 
appreciate that executives' claims that mergers will create 
jobs are often met with skepticism. But here, the proposed 
merger will grow U.S jobs from day one and for the foreseeable 
future. By joining forces, the combined company will be able to 
make the investments needed to create a network that neither 
company could create on its own. The New T-Mobile is committed 
to spending nearly $40 billion over the next three years to 
build its 5G network, while also creating thousands of jobs 
across the country. In fact, we recently announced that the New 
T-Mobile plans to build five new state-of-the-art Customer 
Experience Centers around the United States, with each Center 
creating an average of 1,000 new jobs.
    In addition, the merger puts the combined company in a 
unique position to unlock the growth that will come with 5G. 
And, as previously mentioned, leading the world in 5G also will 
create opportunities for other U.S. companies to develop 
products and applications and to start and grow businesses that 
will employ thousands and thousands more people. On balance, 
this deal will create far more jobs than the status quo.
    Impact on Prepaid Customers. Sprint has long been proud to 
offer prepaid plans, and it is important to emphasize that the 
New T-Mobile's prepaid customers--as with its postpaid 
customers--will see significant benefits as a result of this 
transaction. As we have explained in our public filings, 
following the merger, prepaid customers with compatible 
handsets will enjoy the same improved network as postpaid 
customers, and perhaps more so, since many prepaid customers 
use more data than those on postpaid plans. This improved 
service also will not come with higher prices. The New T-Mobile 
will be incentivized to deliver more for the same or less due 
to having substantially more capacity and lower costs--and will 
face continued and likely intensified competition from Verizon, 
AT&T, and others.
    Impact on Rural Customers. A key benefit of the 
transaction, particularly for Sprint subscribers, will be the 
dramatic increase in rural 5G coverage due to the combined 
company's 600 MHz spectrum and the strong incentives to add 
customers created by the enormous capacity of the combined 
company's network. Because of the current geographic footprint 
of Sprint's network, our customers are too often forced to rely 
on roaming agreements for service coverage in rural areas where 
they cannot access our network, which are often extremely 
expensive and often lead to an inferior customer experience. 
But by adding Sprint's 2.5 GHz spectrum to T-Mobile's current 
spectrum portfolio, the New T-Mobile will be able to reach more 
rural customers and to provide rural customers with mobile and 
in-home broadband service at greater speeds and more consistent 
signal levels.
    The more favorable economics are not limited to wireless 
telephony. The new combined 5G network will have the speeds and 
capacity to effectively compete with in-home broadband in many 
areas. Rural consumers typically have only one or at most two 
choices for in-home broadband today. The New T-Mobile would 
provide another option and inject competition for the benefit 
of these relatively underserved rural customers.

                             * * *

    In short, I truly believe that the New T-Mobile will build 
the best wireless network this country has ever seen, far 
faster than what either Sprint or T-Mobile could do on its own. 
To fill that new network, the New T-Mobile will have strong 
incentives to offer a tremendous new product at a great price. 
By having the best-in-class network, the new company will be 
able to compete for customers who have been reluctant to use 
Sprint or T-Mobile because of concerns that the quality of 
their individual networks is not as good as those offered by 
Verizon or AT&T. The transaction will give these customers more 
and better options. AT&T and Verizon have long prided 
themselves, and promoted themselves, as having the best network 
quality. With the New T-Mobile offering an unrivaled network 
experience, Verizon and AT&T will be forced to compete harder 
and invest more--and sooner--than they would absent the 
competitive spur of this transaction. Their increased 
investment will lead to more competition, better service, and 
more jobs, all to the benefit of American consumers.
    I thank the Subcommittee again for giving me the 
opportunity to share my perspective, and Sprint's perspective, 
on what will be a procompetitive merger that will benefit 
American consumers, American workers, and the American economy.

    Mr. Cicilline. Thank you, Mr. Claure.
    Mr. Shelton is now recognized for five minutes.

                TESTIMONY OF CHRISTOPHER SHELTON

    Mr. Shelton. Chair Cicilline, Ranking Member Sensenbrenner, 
Chair Nadler, Ranking Member Collins, Members of the Committee. 
My name is Chris Shelton. I am the President of the 
Communications Workers of America. We represent 700,000 
employees in telecommunications and other industries, including 
more than 45,000 in the wireless industry.
    Let's tell it like it is. This merger would kill American 
jobs, depress wages, and raise prices on American consumers to 
enrich two foreign companies, Deutsche Telekom from Germany and 
SoftBank from Japan.
    Members of the Committee--that is economic treason. These 
are two of the worst companies in the United States when it 
comes to the treatment of workers. They ship jobs overseas and 
in recent years T-Mobile has been charged with more labor law 
violations per worker than even Walmart.
    Let's talk numbers. This merger would kill American jobs. 
We estimate that 30,000 Americans would lose their job if this 
merger is approved. The Wall Street firm MoffettNathanson 
estimates this merger would kill 20,000 jobs.
    Whether you take their number or ours, you should 
understand that T-Mobile's job creation promises are sheer 
fantasy.
    Sprint and T-Mobile compete for the same type of customers, 
often low-income households, which is why their stores are 
located near each other, sometimes right across the street. So, 
if the companies merge, chances are they would shut down one of 
the two neighboring stores and most of those workers would be 
out of a job.
    What about the people lucky enough to stay employed? The 
merger would drive down wages for all wireless retail workers 
in some cases by as much as $3,000 per year.
    Employers compete for skilled labor with wages and 
benefits. Take away competition and the remaining companies can 
throttle down employee's compensation while jacking up prices 
on consumers. Both are symptoms of the same disease, too much 
market power.
    That leads me to something I hope this Subcommittee and 
antitrust enforcement agencies will support. We need to include 
the wage and job impacts when analyzing whether a merger is 
anticompetitive, and we need to consider the impact of 
collective bargaining on jobs and wages.
    The last 40 years, we have seen more and more mega-mergers. 
Corporate profits keep climbing, productivity is going up, and 
executive compensation has skyrocketed, but workers' wages have 
not kept up. They have stagnated. Highly-concentrated markets 
and lack of competition are part of the reason.
    The weakening of unions as a powerful force to protect 
workers' jobs and wages is another reason for wage stagnation. 
As companies have gained market power through consolidation, 
workers have gotten weaker as a result of the war on labor. In 
antitrust terms, workers have lost countervailing power.
    Together, these two factors go far to explain why wages and 
living standards have stagnated for U.S. workers. They help 
explain the dramatic increase in income inequality in the U.S., 
where the top five percent of Americans control two-thirds of 
our nation's wealth.
    The good news is that America can do something about it. 
First, we can say no to mergers like the T-Mobile/Sprint 
transaction and preserve competition in consumer and labor 
markets. Second, we can bring back collective bargaining to 
protect workers, not just union Members but all workers.
    I have yet to hear either of these two corporate CEOs say 
they would remain neutral to allow their employees to decide 
whether to unionize, free from T-Mobile and Sprint's usual 
bullying tactics, intimidation, and antiunion propaganda. They 
simply don't want workers to have a say.
    If antitrust enforcement agencies and the courts can 
consider the consumer price impacts of a merger, they should be 
able to consider the impact of collective bargaining as a way 
to address anticompetitive effects in relevant labor markets.
    Finally, this merger is not only bad for workers, but it 
also is a disaster for consumers. T-Mobile and Sprint are each 
other's closest rivals, competing aggressively in particular 
for lower-income customers and persons of color.
    By eliminating this competition, economists estimate price 
will go up by as much as 15 percent and while these companies 
trumpet the alleged benefits for rural America, their own FCC 
filing shows that even six years after the merger, 46 million 
Americans, largely in rural areas, would not receive the 
benefits of its 5G network.
    Thank you, and I look forward to answering your questions.
    [The statement of Mr. Shelton follows:]

                    STATEMENT OF MR. SHELTON

    Chairman Cicilline, Ranking Member Sensenbrenner, Chairman 
Nadler, Ranking Member Collins, Members of the Committee: Thank 
you for the opportunity to testify today.
    My name is Chris Shelton. I am President of the 
Communications Workers of America (CWA). CWA represents 
approximately 700,000 men and women who work in 
telecommunications, media, airlines, public service, and 
manufacturing. CWA represents more than 45,000 employees in the 
wireless industry.\1\
---------------------------------------------------------------------------
    \1\ CWA has collective bargaining agreements covering more than 
45,000 AT&T Mobility employees and several Verizon Wireless units. T-
Mobile employees, with CWA support, have joined together to form T-
Mobile Workers United, an organization of T-Mobile and MetroPCS call 
center and retail employees and technicians working to improve 
conditions at work. As I discuss below, both T-Mobile and Sprint have a 
long history of violating workers' rights to form a union.
---------------------------------------------------------------------------
    My own experience in this industry goes back to 1968, when 
I was hired by New York Telephone as a technician. I've worked 
in telecommunications and represented telecommunications 
employees my entire adult life. So I know a little something 
about this industry.
    From the outset, let me be clear: This merger as currently 
structured would kill American jobs, lower wages, and raise 
prices to enrich two foreign companies, Deutsche Telekom from 
Germany and SoftBank from Japan. These are two companies with 
long histories of violating workers' rights.
    I will cover four areas in my testimony today: (1) Job 
losses from the proposed merger; (2) T-Mobile's and Sprint's 
long history of labor law and employment law violations; (3) 
the merger's likely impact on wages; and (4) the reasons 
consumers would be worse off if the merger takes place.
    Job Loss. The merger of T-Mobile and Sprint will eliminate 
an estimated 30,000 jobs across the county. Twenty-five 
thousand five hundred of those jobs would be in retail stores, 
some owned directly by Sprint and T-Mobile and others owned by 
independent retailers. The other job cuts would be in 
headquarters, eliminating duplicative functions.\2\
---------------------------------------------------------------------------
    \2\ See Fact Sheet: How The T-Mobile/Sprint Merger Will Impact 
Jobs, https://cwa-union.org/sites/default/files/t-
mobile_sprint_merger_jobs_fact_sheet_20181126.pdf; Reply Comments of 
Communications Workers of America (October 31, 2018) at 5, https://
ecfsapi.fcc.gov/file/1031880128823/REDACTED%20-%20CWA%20T-Mobile-
Sprint%20Reply%20Comments%2010-31-18.pdf (``CWA Reply Comments''); 
Comments of Communications Workers of America (August 27, 2018) 
Appendix D (describing methodology), https://ecfsapi.fcc.gov/file/
10827275801503/CWA%20T-Mobile-Sprint%20Comments%208-27-2018.pdf (``CWA 
Comments'').
---------------------------------------------------------------------------
    Sprint and T-Mobile compete with each other for the same 
type of customers, often low- and moderate-income households, 
which is why their stores are located near each other, 
sometimes right across the street.\3\ I attach maps of retail 
store locations of T-Mobile, Sprint, and their pre-paid brands 
Metro (T-Mobile) and Boost (Sprint) in Appendix A.
---------------------------------------------------------------------------
    \3\ See CWA Presentation to Federal Communications Commission on 
Proposed Sprint/T-Mobile Merger (November 28, 2018) at 27, https://
ecfsapi.fcc.gov/file/113007585462/Redacted%2011-
30%20CWA%20Ex%20Parte%20Notice%20WT%2018-197.pdf (maps showing retail 
footprint overlaps in New York City and Los Angeles South).
---------------------------------------------------------------------------
    It would make no sense for the merged company to keep all 
these stores open after the merger. That's not how businesses 
operate. Even before this merger was announced, Wall Street 
analysts were projecting store closures and job losses from 
this merger.\4\
---------------------------------------------------------------------------
    \4\ ``Could a Sprint merger with T-Mobile kill more jobs than 
Sprint has?'' Chicago Tribune (October 10, 2017), https://
www.chicagotribune.com/business/ct-biz-sprint-t-mobile-merger-jobs-
20171010-story.html.
---------------------------------------------------------------------------
    CWA did a study, based on T-Mobile's own history and 
methodology, which showed the merger would result in a net job 
loss of:

     L13,700 retail workers in T-Mobile and Sprint 
stores;
     L11,800 workers in Boost and MetroPCS stores (the 
companies' prepaid brands);
     L4,500 headquarters employees.\5\
---------------------------------------------------------------------------
    \5\ See Fact Sheet: How The T-Mobile/Sprint Merger Will Impact 
Jobs; CWA Reply Comments at 5; CWA Comments Appendix D (describing 
methodology).

    T-Mobile's and Sprint's track record with call center jobs 
is also telling. Both send a significant portion of call center 
work to the Philippines, Guatemala, Honduras, India, Mexico, 
Panama, the Dominican Republic, Costa Rica, and Canada.\6\
---------------------------------------------------------------------------
    \6\ Fact Sheet: How The T-Mobile/Sprint Merger Will Impact Jobs; 
CWA Comments at 60-61.
---------------------------------------------------------------------------
    T-Mobile points to its 2012 acquisition of MetroPCS, and 
says look how many jobs that deal created. But MetroPCS was not 
a significant competitor. It was in a line of business that T-
Mobile wanted to get into, prepaid wireless retail, and at the 
time of acquisition, located in only 15 markets. After the 
acquisition, T-Mobile grew the MetroPCS business by expanding 
nationwide. The job growth came from that fact, and that fact 
alone. More than 95 percent of MetroPCS locations are operated 
by authorized dealers, so when T-Mobile is claiming job growth 
here, almost none of that is on its direct payroll.\7\
---------------------------------------------------------------------------
    \7\ CWA Comments at 57.
---------------------------------------------------------------------------
    T-Mobile's 2018 acquisition of iWireless, a regional 
carrier in Iowa, shows what happens to jobs when T-Mobile takes 
over a company that directly competes with it in the same 
geographic territory. The results aren't pretty. T-Mobile 
closed more than 72 percent of iWireless corporate stores and 
more than 93 percent of authorized dealer stores. T-Mobile also 
shuttered iWireless customer call centers in Des Moines and 
Cedar Rapids, Iowa. After the closures, T-Mobile left virtually 
no stores in rural Iowa. People would have to drive an average 
of 68 miles or more to get help from a retail employee.\8\
---------------------------------------------------------------------------
    \8\ CWA, ``Disrupting Rural Wireless: How a T-Mobile Takeover 
Harmed Consumers and Small Businesses in Iowa'' (Feb. 2019), https://
www.tmobilesprintfacts.org/system/files/disrupting-rural-wireless-
201902.pdf.
---------------------------------------------------------------------------
    I attach a copy of CWA's report Disrupting Rural Wireless 
to my testimony as Appendix B.
    So what is the company's response now? Under pressure, T-
Mobile CEO John Legere offers vague promises that the ``New T-
Mobile'' won't close any of the Boost and MetroPCS prepaid 
stores and that it will retain current T-Mobile employees.
    I can tell you that a promise to keep stores open is 
meaningless. A vague promise to keep employees is meaningless. 
Without binding and enforceable commitments--and I mean 
commitments that have no loopholes--such promises are just 
cheap sales talk and are easily broken. If it is more 
profitable to close stores, the ``New T-Mobile'' will close 
them. If it is more profitable to squeeze employees through 
lower wages and commissions or to lay off employees, the ``New 
T-Mobile'' will do so.
    T-Mobile and Sprint have a long history of violation of 
workers' rights. Both of these companies, and T-Mobile in 
particular, have long histories of ignoring workers' rights and 
violating federal labor laws. This history speaks volumes about 
the trustworthiness and corporate character of these companies.
    T-Mobile has an aggressive policy to deny employees their 
legal right to form a union. It has been found guilty of 
violating U.S. labor law six times since 2015 and has been 
subject to approximately 40 unfair labor practice charges since 
2011. Findings of illegal activity by the federal courts, the 
National Labor Relations Board (NLRB), and an Administrative 
Law Judge include, among other things:

     LMaintaining unlawful rules forbidding workers 
from speaking to each other and others about wages and working 
conditions (nationwide violation; U.S. Court of Appeals for the 
5th Circuit affirmed the Board's order).\9\
---------------------------------------------------------------------------
    \9\ T-Mobile USA, Inc., 363 NLRB No. 171 (Apr. 29, 2016), enf'd in 
relevant part T-Mobile USA, Inc. v. Nat'l Labor Relations Bd., 865 F.3d 
265 (5th Cir. 2017).
---------------------------------------------------------------------------
     LCreating, maintaining, dominating and assisting 
an internal organization called T-Voice to try to discourage 
workers from forming, joining, or supporting an independent 
union (nationwide violation).\10\
---------------------------------------------------------------------------
    \10\ T-Mobile USA, Inc., JD-23-17, 2017 WL 1230099 (Apr. 3, 2017).

     LSurveilling and interrogating employees about 
union activity, restricting discussions about working 
conditions over social media, and prohibiting employees from 
sending union-related emails.\11\
---------------------------------------------------------------------------
    \11\ T-Mobile USA, Inc., JD-57-16, 2016 WL 3537770 (June 28, 2016).
---------------------------------------------------------------------------
     LUnlawfully prohibiting employees from talking 
about the union during work time.\12\
---------------------------------------------------------------------------
    \12\ T-Mobile USA, Inc., 365 NLRB No. 15 (Jan. 23, 2017).
---------------------------------------------------------------------------
     LRequiring employees, including one who filed a 
sexual harassment complaint, to sign an unlawful 
confidentiality notice prohibiting them from discussing with 
one another information from employer-led investigations, and 
threatening discipline, up to and including discharge, if they 
engaged in those discussions.\13\
---------------------------------------------------------------------------
    \13\ T-Mobile USA, Inc., JD (NY)-34-15, 2015 WL 4624356 (Aug. 3, 
2015), adopted by NLRB on Sept. 14, 2015.

    In recent years, T-Mobile has been the subject of more 
unfair labor practice charges per employee than any other big 
business in the United States, including Walmart.
    Sprint's violation of workers' rights dates back to the 
landmark La Conexion Familiar case in which Sprint fired 226 
employees and closed its Spanish-language telemarketing center 
in San Francisco to avoid a union election.\14\ Sprint current 
and former workers have sued the company multiple times for 
alleged wage and hour violations affecting thousands of 
workers.\15\
---------------------------------------------------------------------------
    \14\ CWA Comments at 67-70 (citing La Conexion Familiar and Sprint 
Corp., 322 NLRB No. 137 (1996)).
    \15\ See Cara Bayles, Sprint Inks $1.2 M Deal To End Workers' Wage 
And Hour Suit, Law360 (Oct. 4, 2017), https://www.law360.com/articles/
970869/sprint-inks-1-2m-deal-to-end-workers-wage-and-hour-suit; David 
McAfee, $4.85 M Settlement for Sprint Workers Gets First OK, Bloomberg 
(Feb. 29, 2016), https://www.bna.com/485m-settlement-sprint-
n57982067900/; Sprint settles overtime pay suits for $8.8 M, Kansas 
City Business Journal (Jan. 15, 2009), https://www.bizjournals.com/
kansascity/stories/2009/01/12/daily40.html; See Erin Marie Daly, Sprint 
Call Center Workers Win Back Wages, Law360 (May 21, 2009), https://
www.law360.com/texas/articles/102852/sprint-call-center-workers-win-
back-wages.
---------------------------------------------------------------------------
    No matter how many online ``Town Hall'' pep rallies Mr. 
Legere stages, the facts are clear that T-Mobile does not 
respect the rights of its employees that are guaranteed by law.
    The merger will reduce wages and benefits for retail 
wireless workers. Permitting this merger to go through as 
proposed would drive down wages for all Americans who work in 
the wireless retail market, in some cases by as much as $3,000 
per year.
    In recent years, economists have puzzled over a central 
question. Over the past three decades, productivity has gone 
up, corporate profits have increased, and executive 
compensation has skyrocketed. But workers' wages have 
stagnated. Wages have become detached from productivity 
gains.\16\
---------------------------------------------------------------------------
    \16\ See Economic Policy Institute, ``The Productivity-Pay Gap'' 
(updated August 2018), https://www.epi.org/productivity-pay-gap/.
---------------------------------------------------------------------------
    The lack of wage growth is a persistent problem that, 
without question, has led to the hollowing out of the American 
middle class and increased income inequality. A central reason 
for wage stagnation is the decline in collective bargaining 
coverage in this country. Simply put, unions raise wages.\17\ 
Another reason for wage stagnation, and one that is 
particularly relevant to this Subcommittee, is the 
consolidation that has been brought about through mergers 
between non-union firms. Since 2008, American firms have 
engaged in one of the largest rounds of mergers in history.\18\ 
By most accounts, industries in America have become 
increasingly concentrated.\19\ And as industries have 
consolidated, labor markets have also consolidated. As the 
Council of Economic Advisors explained at the end of the Obama 
Administration:
---------------------------------------------------------------------------
    \17\ See Economic Policy Institute, ``How Today's Union's Help 
Working People,'' (August 24, 2017), https://www.epi.org/publication/
how-todays-unions-help-working-people-giving-workers-the-power-to-
improve-their-jobs-and-unrig-the-economy/.
    \18\ See ``Too Much of a Good Thing,'' The Economist, March 26, 
2016, https://www .economist.com/briefing/2016/03/26/too-much-of-a-
good-thing.
    \19\ See generally ``Is there a Concentration Problem in America?'' 
Stigler Center for the Study of the Economy and the State, University 
of Chicago Booth School of Business, https://promarket.org/wp-content/
uploads/2018/04/Is-There-a-Concentration-Problem-in-America.pdf.

        The presence of a limited number of firms in the market for a 
        particular type of labor may give each of these firms some 
        power in setting wages. For example, factory line workers have 
        fewer opportunities to ``vote with their feet'' in a town with 
        one manufacturing plant relative to one with many. Holding 
        other factors equal, higher concentration in a labor market may 
        lead to lower wages just as higher concentration in a product 
        market often leads to higher prices.\20\
---------------------------------------------------------------------------
    \20\ Counsel of Economic Advisors Issue Brief (October 2016), Labor 
Market Monopsony: Trends, Consequences, and Policy Responses, https://
obamawhitehouse.archives.gov/sites/default/files/page/files/
20161025_monopsony_labor_mrkt_cea.pdf, at 4.

    Recently, a number of economists have been measuring the 
impact that mergers have on wages, particularly as more 
industries become highly concentrated.\21\ Professor Eric 
Posner of the University of Chicago has observed that 
``[c]oncentration is far more serious in labor markets than in 
product markets; wage suppression is much more significant than 
price inflation.'' \22\
---------------------------------------------------------------------------
    \21\ See Ioana Elena Marinescu and Herbert J. Hovenkamp, 
Anticompetitive Mergers in Labor Markets (2018), Faculty Scholarship at 
Penn Law, https://scholarship.law.upenn.edu/faculty_scholarship/1965 at 
9 (``Until recently, imperfect competition in the labor market has not 
received much attention in antitrust enforcement. One possible reason 
is the belief that there are many jobs out there, so a merger is 
unlikely to lead to a monopsony and tosubstantially affect workers' 
opportunities in the labor market. However, a growing body of empirical 
evidence indicates that labor market monopsony is a real issue.''); See 
also Jose Azar, Ioana Marinescu, and Marshall Steinbaum ``Labor Market 
Concentration,'' National Bureau of Economic Research Working Paper No. 
24147 (December 2017), National Bureau of Economic Research Working 
Paper No. 24147; Kevin Rinz, ``Labor Market Concentration, Earnings 
Inequality, and Earnings Mobility,'' CARRA Working Paper No. 2018-10 
(2018), https://www.census.gov/library/working-papers/2018/adrm/carra-
wp-2018-10.html.
    \22\ See Eric A. Posner, ``Why the FTC Should Focus on Labor 
Monopsony,'' https://promarket.org/ftc-should-focus-labor-monopsony/.
---------------------------------------------------------------------------
    The antitrust agencies, under both Democratic and 
Republican leadership, have begun to focus on the problem of 
labor market power.\23\
---------------------------------------------------------------------------
    \23\ The head of the Antitrust Division under former President 
Obama stated that antitrust enforcement efforts must benefit not only 
consumers, but ``also benefit workers, whose wages won't be driven down 
by dominant employers with the power to dictate terms of employment.'' 
Acting Assistant Attorney General Renata Hesse of the Antitrust 
Division Delivers Opening Remarks at 2016 Global Antitrust Enforcement 
Symposium (September 20, 2016), https://www.justice.gov/opa/speech/
acting-assistant-attorney-general-renata-hesse-antitrust-division-
delivers-opening. The current Chair of the Federal Trade Commission has 
directed FTC staff to include effects on the labor market in their 
merger investigations. See Pallavi Guniganti, ``FTC will look at labour 
monopsony, Hoffman says,'' Glob. Competition Review, June 8, 2018, 
https://globalcompetitionreview.com/article/usa/1170360/ftc-will-look-
at-labour-monopsony-hoffman-says. The current head of the Antitrust 
Division has increased enforcement efforts directed at so-called ``no 
poaching'' agreements among employers. See ``US: DOJ Antitrust Division 
announced criminal prosecution for No Poaching agreements,'' 
Competition Policy International (Feb. 7, 2018), https://
www.competitionpolicyinternational.com/us-doj-antitrust-division-
announced-criminal-prosecution-for-no-poaching-agreements/.
---------------------------------------------------------------------------
    Collective bargaining can mitigate this effect.\24\ Indeed, 
the preamble to the National Labor Relations Act recognizes 
that ``protection by law of the right of employees to organize 
and bargain collectively'' may restore ``equality of bargaining 
power between employers and employees.'' \25\ In antitrust 
terms, collective bargaining can create countervailing power. 
As I have already discussed, both T-Mobile and Sprint have long 
histories of violating workers' rights.
---------------------------------------------------------------------------
    \24\ Efraim Benmelech, Nittai Bergman, Hyunseob Kim, ``Strong 
Employers and Weak Employees: How Does Employer Concentration Affect 
Wages?'' National Bureau of Economic Research Working Paper No. 24307 
(February 2018), https://www.nber.org/papers/w24307.
    \25\ See 29 U.S.C. 151.
---------------------------------------------------------------------------
    The Economic Policy Institute and the Roosevelt Institute 
did a study of the proposed T-Mobile and Sprint merger in order 
to see what impact it is likely to have on the wages of retail 
wireless workers.\26\ After the merger, those workers will lose 
one option that is available to them today about where to work. 
The results are instructive. According to the authors,
---------------------------------------------------------------------------
    \26\ ``Labor market impact of the proposed Sprint-T-Mobile merger'' 
(December 17, 2018), https://www.epi.org/files/pdf/159194.pdf.

        We find that the merger would reduce earnings in the affected 
        labor markets. Specifically, in the 50 most affected labor 
        markets, we predict that weekly earnings will decline by $63 on 
        average (across markets) using the specification with the 
        largest magnitude, and $10 on average using the smallest 
        magnitude specification. These weekly earnings declines 
        correspond to annual earnings declines of as high as $3,276 (or 
        $520 under the smallest-magnitude specification).\27\
---------------------------------------------------------------------------
    \27\ Id. at 1.

    To put this finding in context, it means that the proposed 
merger could lead to an aggregate annual earnings reduction of 
between $82.8 million and $543.6 million for the roughly 
220,000 retail wireless workers in the United States.\28\ This 
would be nothing other than a transfer of wealth from workers 
to corporate owners, pure and simple. Importantly, these and 
other researchers have also found that unionization mitigates 
the earnings-reducing effect of concentration.\29\
---------------------------------------------------------------------------
    \28\ See CWA Notice of Ex Parte Meeting, March 1, 2019, https://
ecfsapi.fcc.gov/file/1030225339358/CWA%20Ex%20Parte%20%202-27-19.pdf, 
at 4.
    \29\ Efraim Benmelech, Nittai Bergman, Hyunseob Kim, ``Strong 
Employers and Weak Employees: How Does Employer Concentration Affect 
Wages?'' National Bureau of Economic Research Working Paper No. 24307 
(February 2018), https://www.nber.org/papers/w24307.
---------------------------------------------------------------------------
    I attach a copy of the EPI/Roosevelt Institute study 
entitled ``Labor market impact of the proposed Sprint-T-Mobile 
merger'' to my testimony as Appendix C.
    The Merger Would Harm Consumers with Higher Prices. 
Finally, I want to spend just a small amount of time on how and 
why the proposed merger would be bad for consumers.
    A few years ago, SoftBank (the parent company of Sprint) 
approached Assistant Attorney General William Baer of the U.S. 
Department of Justice Antitrust Division and Chairman Tom 
Wheeler of the Federal Communications Commission about a 
possible deal with T-Mobile. Both of these officials made it 
crystal clear to Sprint's owners not to push ahead with it. As 
Baer and Wheeler put it, ``The idea of eliminating a pesky 
rival may have made sense for Sprint. But not for the American 
consumer.'' Sprint reluctantly ditched the idea.\30\
---------------------------------------------------------------------------
    \30\ Bill Baer and Tom Wheeler, ``Here's who loses big time if 
Sprint and T-Mobile are allowed to merge,'' CNBC (May 19, 2017), 
https://www.cnbc.com/2017/05/19/heres-who-loses-big-time-if-sprint-and-
t-mobile-are-allowed-to-merge-commentary.html.
---------------------------------------------------------------------------
    Sprint and T-Mobile are each other's closest competitors. 
Their prepaid brands, in particular, compete aggressively for 
lower-income customers and persons of color in large, urban 
U.S. markets.\31\
---------------------------------------------------------------------------
    \31\ See Reply to Opposition by Free Press (October 31, 2018), at 
2, 14-18, https://www .freepress.net/sites/default/files/2018-11/
redacted_mobile_sprint_reply_comments_free _press.pdf.
---------------------------------------------------------------------------
    While these companies trumpet the alleged benefits of this 
merger for rural America, data in their own FCC filings show 
the contrary. Even six years after a T-Mobile/Sprint merger, 46 
million Americans--which include most of the merged company's 
rural customers--would not receive the benefits of its next-
generation 5G network. Rather, they would be forced to settle 
for a service that has significantly lower performance than the 
urban and suburban parts of the network. The ``digital divide'' 
between urban and rural America is likely to get worse, not 
better.\32\
---------------------------------------------------------------------------
    \32\ CWA Comments at 47-52 and Appendix A: Declaration of Andrew 
Afflerbach, Ph.D., P.E. (``[B]ased on my review of the information 
presented in the Applicant's [Public Interest] Statement, the merged 
New T-Mobile would only provide marginally better broadband options 
than stand-alone T-Mobile in much of rural America.'').
---------------------------------------------------------------------------
    I attach a copy of the Declaration of Dr. Andrew Afflerbach 
analyzing the impact of the proposed T-Mobile/Sprint merger on 
rural America to my testimony as Appendix D.
    Last time I checked, the antitrust laws and the 
requirements under the Communications Act have not changed. 
Congress has not repealed them. And keep in mind, the antitrust 
laws are laws, they are not just recommendations or 
suggestions. A merger that was presumptively unlawful in 2015 
or 2016 is presumptively unlawful today.
    Our economy is at a crossroads. We as a Nation must decide 
whether we will permit the inexorable drive towards corporate 
consolidation and concentrated power at the expense of 
employees, customers, communities, and our economy.
    This bad deal is not saved by 5G, 6G or 7G. It is not saved 
because the next technological development is on the horizon. 
It is not saved by speculating about competition with cable 
companies.
    This deal, if it goes ahead, will destroy 30,000 American 
jobs and hurt consumers. The harms are real. The alleged 
benefits are pure sales talk. This merger would kill American 
jobs and raise prices for consumers to benefit two foreign 
companies, Deutsche Telekom from Germany and SoftBank from 
Japan.
    Thank you for giving me the opportunity to testify.
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Cicilline. Thank you, Mr. Shelton.
    Ms. Sohn is now recognized for five minutes.

                     TESTIMONY OF GIGI SOHN

    Ms. Sohn. Chair Cicilline, Ranking Member Sensenbrenner, 
Chair Nadler, Members of the Subcommittee, thank you for 
inviting me to testify today.
    When I was working for Chair Wheeler in 2014, executives 
from T-Mobile, Sprint, and SoftBank visited the FCC several 
times to get his thoughts on a possible merger between T-Mobile 
and Sprint.
    Chair Wheeler didn't discourage the parties from seeking 
merger approval, but he was clear that they would have a tough 
time showing that the merger wouldn't be anticompetitive.
    A pioneer in the wireless industry, Chair Wheeler had seen 
immense consolidation from 2003 to 2013, the country's eight 
mobile wireless carriers shrunk to just four. He believed 
strongly that reducing the number of wireless carriers from 
four to three would harm consumers through higher prices, 
coordinated effects, and less innovation.
    Bill Baer, the Assistant Attorney General for Antitrust at 
the time, agreed and said so publicly in January 2014.
    Later that year, after the parties abandoned the deal, 
Chair Wheeler said, ``Four national wireless providers are good 
for American consumers. Sprint now has an opportunity to focus 
their efforts on robust competition.''
    Nothing in the intervening five years has altered the 
previous analysis that this combination would be harmful for 
consumers and the wireless industry.
    T-Mobile and Sprint occupy vital roles in today's national 
wireless market. Both are mavericks who forced AT&T and Verizon 
to lower their prices and to adopt more consumer-friendly 
service plans.
    T-Mobile was the first carrier to eliminate two-year 
contracts and provide unlimited data. T-Mobile and Sprint were 
the first to allow subscribers to unlock their phones. Both 
companies fought to match AT&T and Verizon in coverage, speed, 
and reliability. Importantly, the companies compete to the 
benefit of the value-conscious consumer.
    This dynamic will change if the companies are allowed to 
merge. With a market share similar to AT&T and Verizon, New T-
Mobile would have reduced incentives to engage in price and 
non-price competition as well as greater incentive and ability 
to cooperate with those companies to raise consumer and 
wholesale prices.
    Indeed, one analysis found that consumer price increases 
from this transaction could be as much as 15 percent. The 
merging parties don't dispute that prices will rise but argue 
that improvements to the service quality, no matter how small, 
will be worth the extra cost. That is a dicey proposition for 
consumers that are attracted to T-Mobile and Sprint because of 
their cheaper postpaid innovative prepaid services.
    These higher prices will have a disproportionate effect on 
consumers of prepaid service who tend to be low-income and 
people of color. This merger would result in New T-Mobile 
controlling about 43 percent of prepaid market and the market 
for prepaid services would shrink from three to two.
    The merging parties recognize these price increases but 
argue that low-income consumers will accept them because they, 
and I quote, ``heavily rely on their smart phone for their 
communication and media consumption.'' That is quite a 
remarkable thing to say about consumers for whom an extra $10 a 
month would be an unwelcomed hardship.
    The harm from four to three mobile wireless mergers is 
clear. In both the Netherlands and Austria, four to three 
mergers saddle consumers with double-digit price increases. In 
both cases, one of the remaining carriers was a T-Mobile 
affiliate. In the U.S. similar concerns over higher prices and 
the elimination of competition moved the DOJ to sue to block 
the proposed AT&T/T-Mobile merger in 2011.
    Faced with overwhelming evidence that four to three mergers 
and this particular merger will lead to higher prices, T-Mobile 
has twice promised the FCC not to raise prices on its rate 
plans for three years. The mere fact that T-Mobile believes it 
must make this so-called pricing commitment is an admission 
that post-merger there would not be enough competition in the 
wireless market to constrain price increases.
    It also undermines the parties insistence that the merged 
entity would have so much capacity that it wouldn't raise 
prices. Regardless, the pricing commitment is riddled with 
ambiguities and loopholes. Neither the FCC nor the DOJ is 
capable of overseeing this kind of price regulation.
    My written testimony argues that the purported benefits of 
this merger, faster 5G roll-out, increased rural coverage, and 
more jobs, are speculative, non-merger-specific, and non-
cognizable, in any event wouldn't outweigh the merger's harms.
    I will add T-Mobile's recent promise that it will provide 
in-home broadband to a fraction of U.S. homes by 2024. I would 
love to see more competition to big cable, but in addition to 
being too far in the future to be relevant to antitrust 
scrutiny, this promise has absolutely nothing to do with the 
market that is the subject of this merger: the market for 
national mobile wireless services.
    I am a proud T-Mobile customer and a fan of both its CEO 
and its Government Relations Team, but I am not a fan of this 
merger because the harms to consumers who value low-cost and 
innovative service plans far outweigh the supposed benefits.
    Thank you, and I look forward to your questions.
    [The statement of Ms. Sohn follows:]

                     STATEMENT OF MS. SOHN

    Chairman Cicilline, Ranking Member Sensenbrenner and 
Members of the Subcommittee.
    My name is Gigi Sohn. I am a Distinguished Fellow with the 
Georgetown Institute for Technology Law and Policy and a Benton 
Senior Fellow and Public Advocate. I served as Counselor to 
former Federal Communications Commission (``FCC'') Chairman Tom 
Wheeler from November 2013 to December 2016. In 2011, as 
President and CEO of Public Knowledge, I testified alongside 
then-Sprint CEO Dan Hesse at a hearing of the Senate Judiciary 
Committee's Antitrust Subcommittee in opposition to the 
proposed AT&T-T-Mobile merger.
    Thank you for inviting me to testify today on the proposed 
merger of Sprint and T-Mobile.

  Introduction: The Sprint T-Mobile Merger: Wrong Then and Now

    When I was working for Chairman Wheeler in the spring and 
summer of 2014, executives from T-Mobile, Sprint and Softbank 
visited the Commission on several occasions to get Chairman 
Wheeler's thoughts on a possible merger between T-Mobile and 
Sprint. These meetings included on at least one occasion, a 
detailed Power Point presentation on the alleged merits of the 
transaction.
    Chairman Wheeler did not discourage T-Mobile and Sprint 
from seeking FCC approval of the merger, but he was clear that 
the parties would have a difficult time convincing him that 
such a merger would not be anticompetitive. As pioneer and an 
entrepreneur in the mobile wireless industry, Chairman Wheeler 
had seen firsthand immense consolidation in the industry: from 
2003-2013, the country's 8 mobile wireless carriers were 
reduced to just 4. While he believed then that that the mobile 
wireless industry had already gotten too consolidated, he also 
believed strongly that further reducing the number of national 
wireless carriers from 4 to 3 would harm consumers through 
higher prices, coordinated effects and less innovation. In 
August 2014, following news that the parties had abandoned the 
deal, Chairman Wheeler issued the following statement:

        ``Four national wireless providers are good for American 
        consumers. Sprint now has an opportunity to focus their efforts 
        on robust competition.'' \1\
---------------------------------------------------------------------------
    \1\ Brian Fung, Why regulators are the big winners in the failed 
Sprint-T-Mobile deal, Washington Post, August 6, 2014 found at https://
www.washingtonpost.com/news/the-switch/wp/2014/08/06/why-regulators-
are-the-big-winners-in-the-failed-sprint-t-mobile-deal/?utm_term= 
.69e1ef0f8f16.

    Chairman Wheeler was correct then to think that such a 
merger would be anticompetitive. Nothing in the intervening 5 
years has altered the analysis that this combination would be 
harmful. Today, the proposed Sprint T-Mobile merger would be 
just as bad for consumers and the wireless industry.\2\ It 
would concentrate market power in the hands of three behemoth 
wireless companies, driving up prices and reducing innovation. 
The history of 4-to-3 mergers in the mobile wireless industry 
in Europe is instructive here--in each case, consumers have had 
to bear the brunt of significant price increases.
---------------------------------------------------------------------------
    \2\ Chairman Wheeler, and Bill Baer, who was the Assistant Attorney 
General for Antitrust under President Obama agree, writing in a 2017 
editorial that ``the merger made no sense before, and it makes no sense 
today.'' Bill Baer and Tom Wheeler, Here's Who Loses Big Time if Sprint 
and T-Mobile are Allowed to Merge, CNBC, May 19, 2017) found at https:/
/www .cnbc.com/2017/05/19/heres-who-loses-big-time-if-sprint-and-t-
mobile-are-allowed-to-merge-commentary.html.
---------------------------------------------------------------------------
    The merging parties allege a number of benefits that they 
say will result from this merger: faster 5G buildout, increased 
rural buildout and more jobs. But these purported benefits are 
speculative, non-cognizable and not specific to this merger, 
and in any event do not outweigh the harms to consumers and 
competition that would result from this transaction.
    For these reasons, and the reasons described by my 
colleagues on this panel and in the FCC's record, the Members 
of this Committee should urge the Department of Justice 
(``DOJ'') and the FCC to block this transaction.

  I. Merger of T-Mobile and Sprint Will Substantially Lessen 
  Competition in the National Mobile Wireless/Broadband Market

    The proposed merger of T-Mobile and Sprint into a New T-
Mobile is a classic 4-to-3 horizontal merger that will lead to 
fewer choices, higher prices, and less consumer-friendly 
service offerings.
    The New T-Mobile would combine two maverick firms that 
have, for the past 8 years, forced the two largest mobile 
wireless carriers, Verizon and AT&T, to lower their prices and 
adopt more consumer-friendly service offerings. For example, T-
Mobile, the ``Un-Carrier,'' was the first to eliminate two-year 
contracts and to provide unlimited data and creative family 
plans. T-Mobile and Sprint were the first carriers to allow 
subscribers to unlock their phones. Sprint proudly took a 
chainsaw to its competitor Verizon's bills and offered to cut 
those costs in half. Both companies have fought to match AT&T 
and Verizon in coverage, speed and reliability.
    T-Mobile and Sprint have promoted themselves as low-cost 
providers and currently offer the cheapest data plans of the 4 
nationwide mobile wireless carriers. As such, T-Mobile and 
Sprint have competed vigorously with each other as well, to the 
benefit of the ``value consumer'' seeking better rates and 
service plans. Just as important, the competition between 
Sprint and T-Mobile has had a moderating effect on AT&T and 
Verizon, forcing them to respond with lower prices and more 
attractive service options. All of this competition has 
benefitted consumers.
    If allowed to proceed, this merger would result in a New T-
Mobile with a market share closer to that of AT&T and Verizon. 
As a result, New T-Mobile would have reduced incentives to 
engage in price and non-price competition, as well as a greater 
incentive and ability to cooperate and collude with those 
companies to raise both consumer and wholesale prices. The 
remaining three network operators would each have the incentive 
to raise prices unilaterally and also to substantially increase 
the maximum price that carriers will be willing to initiate and 
match.
    Indeed, one analysis found that this transaction ``will 
result in [consumer] price increases of up to 15%.'' \3\
---------------------------------------------------------------------------
    \3\ Petition to Deny of Dish Network Corporation in the Matter of 
Applications of T-Mobile U.S., Inc. and Sprint Corporation (filed 
August 27, 2018) at 11.
---------------------------------------------------------------------------
    The merging parties don't dispute that prices will go up, 
but argue instead without proof that the improvements to the 
quality of their service, no matter how minimal, will be worth 
the significant extra cost. That is a dicey proposition for the 
value and low-income consumers that are most attracted to T-
Mobile and Sprint because of their less expensive postpaid and 
their innovative prepaid services.
    These higher prices will have a disproportionate effect on 
customers of prepaid service, who tend to be low income 
customers and people of color. This merger would combine T-
Mobile's Metro PCS and Sprint's Boost Mobile and Virgin Mobile 
Services, resulting in New T-Mobile controlling an estimated 
43% percent of the pre-paid market.\4\ Since Verizon has 
negligible pre-paid service, this merger would for all intents 
and purposes shrink the market for facilities-based prepaid 
wireless services from 3 to 2. The economists for the merging 
parties recognize that such concentration is likely to lead to 
higher prices for low income consumers, but argues that such 
consumers will be more willing to stomach price increases 
because they ``heavily rely on their smartphone for their 
communication and media consumption.'' \5\ That's a remarkable 
statement for a segment of Americans for whom an extra $10 a 
month might mean missing a few meals to pay their cell phone 
bills.
---------------------------------------------------------------------------
    \4\ Anna-Maria Kovacs, Competition in the U.S. Wireless Service 
Market at 6 (August 2018) found at https://cbpp.georgetown.edu/sites/
default/files/Policy%20Paper%20-%20Kovacs%20-
%20Wireless%20Competition%202018-08.pdf.
    \5\ Letter from Nancy Victory, Counsel for T-Mobile, to Marlene 
Dortch FCC, Attachment A at 18, (December 18, 2018).
---------------------------------------------------------------------------
    Many of the same concerns that caused the DOJ to file suit 
to enjoin the proposed AT&T-T-Mobile merger are present here. 
Like AT&T-T-Mobile, this merger will shrink the already 
concentrated mobile wireless market from 4 to 3 players. Like 
AT&T-T-Mobile, this merger will lead to higher prices and fewer 
innovative service offerings. Like AT&T-T-Mobile, this merger 
would eliminate actual and potential competition between the 
two merging firms. Instead of combining one maverick firm with 
a large incumbent, it combines two remaining maverick firms, 
making disruption less likely and coordination more likely. 
Moreover, this transaction would lead to unprecedented spectrum 
concentration: It will cause New T-Mobile to exceed the FCC's 
spectrum screen in 532 Cellular Market Areas (``CMAs''), almost 
double the number of the proposed AT&T-T-Mobile transaction.\6\
---------------------------------------------------------------------------
    \6\ Petition to Deny of DISH Network Corporation in the Matter of 
Applications of T-Mobile U.S., Inc. and Sprint Corporation (filed 
August 27, 2018) at 71 (``Second, Brattle finds that New T-Mobile would 
be over the screen threshold in 1,996 out of the nation's 3,221 
counties, or in 532 CMAs, covering all of the top 100 markets. By 
comparison, the rejected AT&T/T-Mobile merger would have caused AT&T to 
exceed the screen in 274 CMAs. New T-Mobile would be over the screen 
across 90.2% of the country's population and almost half of its land 
area.'') (internal citations omitted).
---------------------------------------------------------------------------
    Evidence from previous 4-to-3 mobile wireless mergers in 
Europe confirm the harms to consumers. In the Netherlands, the 
European Commission found that the 4-to-3 merger of T-Mobile 
Nederland and Orange in that country resulted in price 
increases of between 10% and 17% compared to control 
countries.\7\ In Austria, a merger of Orange Austria and H3G 
Austria also resulted in 4-to-3 consolidation. While the 
European Commission imposed a facilities-based condition to 
approving the merger, those conditions didn't materialize, and 
the spectrum intended for the new entrant reverted to H3G. As a 
result, consumers suffered a 14-20% increase from that 
merger.\8\ This example is especially instructive because one 
of the three remaining players was T-Mobile's affiliate, T-
Mobile Austria.
---------------------------------------------------------------------------
    \7\ European Commission, Ex post analysis of two telecom mergers: 
T-Mobile/tele.ring in Australia and T-Mobile/Orange in the Netherlands 
found at https://www.rtr.at/de/inf/Analysis _mobile_mergers/Ex-ost_ 
analysis_of_two_mobile_telecom_mergers.pdf.
    \8\ Id.
---------------------------------------------------------------------------
    Finally, a recent study by Rewheel Research looked at 
European markets and found that ``the median gigabyte price in 
3 [Mobile Network Operator] markets is 2 higher than in 4 
[Mobile Network Operator markets].'' \9\
---------------------------------------------------------------------------
    \9\ Rewheel/research, The State of 4G pricing--2H2018, found at 
http://research.rewheel.fi/downloads/
The_state_of_4G_pricing_DFMonitor_10th_release_2H2018_PUBLIC.pdf.
---------------------------------------------------------------------------

 II. The Parties' Pricing Commitment Is No Commitment at All, 
 but Instead Is an Admission That There Will Be No Constraints 
            on Pricing if This Merger Is Consummated

    In response to the consensus that the proposed merger will 
lead to higher prices, T-Mobile's counsel submitted an open 
letter to the FCC offering a ``pricing commitment'' that would 
maintain existing T-Mobile and Sprint ``rate plans'' for three 
years. Then, when merger opponents pointed out that the so-
called ``commitment'' was riddled with ambiguities and 
loopholes, T-Mobile filed another 8-page letter attempting to 
``simplify'' the offer.
    First and foremost, the fact that T-Mobile had to file two 
letters with the FCC to explain its pricing commitment is an 
admission that post-merger, there would not be enough 
competition in the wireless market to constrain price 
increases.
    In its effort to simplify the pricing commitment, T-Mobile 
actually sows more confusion. T-Mobile originally promised that 
``T-Mobile and Sprint legacy rate plans will continue as New T-
Mobile plans for three years after the merger or until better 
plans that offer a lower price or more data are made available, 
whichever occurs first.\10\ In its second letter, T-Mobile 
explains that a ``better plan'' is ``the same plan with a lower 
price; the same plan with more data for the same price; or the 
same plan with a lower price and more data.'' \11\
---------------------------------------------------------------------------
    \10\ Letter from Nancy Victory, T-Mobile Counsel, to Marlene 
Dortch, FCC at 4, WT Docket No. 18-197 (Feb 4, 2019).
    \11\ Letter from Nancy Victory, T-Mobile Counsel, to Marlene 
Dortch, FCC at 3, WT Docket No. 18-197 (Feb. 12, 2019).
---------------------------------------------------------------------------
    But this begs any number of questions: What does ``same 
plan'' mean? What does ``same price'' mean? When does a plan 
become different? Would a different price per month be 
considered the same price if the customer receives some non-
monetary benefit?
    Moreover, this new filing does nothing to ameliorate 
concerns that this ``commitment'' is anything but. In addition 
to being time limited at 3 years, the pricing plan still has 
significant loopholes that could allow New T-Mobile to raise 
prices on consumers, including:

      increased prices through handset or device costs
      increased prices through any manner of unnamed 
additional fees and surcharges
      increased prices to offset claimed costs 
increased from ``third party partners'' or cancellation of 
benefits (like T-Mobile's free subscription to Netflix) from 
those partners

    There are still many ways that New T-Mobile could exploit 
these loopholes,\12\ for example:
---------------------------------------------------------------------------
    \12\ For a non-exhaustive list of examples, see Letter from 
Pantelis Michalopolous, Counsel to DISH Network to Marlene Dortch, FCC 
at 4-6, WT Docket No. 18-197 (Feb. 7, 2019).

      Make it more difficult to upgrade devices
      Increase the cost to purchase or upgrade to a new 
phone
      Increase the down payment for a new phone
      Remove the ability to use the phone as a hotspot

    The ambiguities and opportunities for evasion in this kind 
of behavioral remedy (price regulation) would require strong 
government oversight that is generally disfavored by antitrust 
authorities. As Assistant Attorney General for Antitrust Makan 
Delrahim has explained: ``In telecommunications, as in other 
industries, we strongly favor structural remedies. If a 
structural remedy isn't available, then, except in the rarest 
of circumstances, we will seek to block an illegal merger.'' 
\13\
---------------------------------------------------------------------------
    \13\ Assistant Attorney General Makan Delrahim Delivers Remarks at 
the Federal Telecommunications Institute's Conference in Mexico City 
(Nov. 7, 2018) found at https://www .justice.gov/opa/speech/assistant-
attorney-general-makan-delrahim-delivers-remarks-federal-institute.
---------------------------------------------------------------------------
    The challenges inherent in government oversight of 
behavioral remedies--and specifically price regulation--
manifested itself just last month, when the European Commission 
alleged that Telefonica Deutschland breached its commitment to 
offer wholesale 4G services to all interested parties at ``best 
prices,'' as part of its acquisition of E-plus, the German 
mobile telecommunications business of Dutch Telecom operator 
KPN. This too, occurred in the aftermath of a 4-to-3 merger.

  III. The Purported Benefits of This Merger are Speculative, 
    Non-Merger Specific and Non-Recognizable, and Would not 
                       Outweigh Its Harms

    In recognition of the harms that this transaction will 
bring to consumers and competition, the merging parties allege 
three benefits to this merger: Better rollout of 5G services, 
greater rural coverage and an increase in jobs. But the parties 
have failed to show either that these benefits will ever 
materialize or that they are specific to this merger. Nor have 
they shown that the benefits will outweigh the harm to 
consumers and competition that would result from this 
transaction.

A. 5G Deployment Is Already Happening and Will Continue Rapidly 
                  With or Without This Merger

    The merging parties alternatively make two claims--that 
this transaction is necessary to accelerate the rollout of new 
5G wireless services (and therefore make the U.S. the leader in 
5G connectivity) and also that neither company alone has the 
wherewithal to build a nationwide 5G network.
    Neither of these claims are true. With regard to whether 
this merger is necessary to speed the deployment of 5G and win 
the so-called ``race'' to 5G (presumably with China), AT&T 
responded in its comments to the FCC on the merger applications 
that:

        ``In fact, the U.S. is already the world leader in 5G, and AT&T 
        and the other major facilities based wireless carriers are in 
        the midst of a race to deploy next generation 5G services--a 
        race that began long before T-Mobile and Sprint announced their 
        merger plans.''

    U.S. Policymakers like FCC Chairman Pai and Commissioner 
Carr have also boasted that the U.S. is the world leader in 5G 
deployment. A study released late last month by ABI Research, 
which provides analysis on transformative technologies, found 
that as a result of the financial health of the four nationwide 
carriers and forward-looking FCC policies, the U.S. is 
currently the leader in 5G rollout and will continue to be for 
at least two years.\14\
---------------------------------------------------------------------------
    \14\ ABI Research, 5G in the United States, 1Q 2019, found at 
https://www.abiresearch.com/market-research/product/1031420-5g-in-the-
united-states/.
---------------------------------------------------------------------------
    But don't just take it from AT&T, FCC Commissioners and 
expert analysts. Listen to the merging parties' representatives 
themselves and what they said prior to the merger about their 
ability and timing to build new 5G networks. Prior to the 
merger announcement in February 2018, T-Mobile stated that it 
``will be the first to give customers the truly transformative, 
nationwide 5G network they deserve[.]'' \15\ It also announced 
that it would accelerate its 600 MHz rollout in 2018, while 
laying the foundation for the country's first nationwide 5G 
network by 2020. In its annual 10-K filing for 2017, T-Mobile 
explained that it is ``rapidly preparing for the next 
generation of 5G services'' by creating a ``network that will 
allow us to deliver innovative new products and services with 
the same customer focused and industry disrupting mentality 
that has redefined wireless service in the United States.\16\
---------------------------------------------------------------------------
    \15\ Ericsson and T-Mobile to Deploy Multiband Nationwide 5G 
Network (Feb. 27, 2018) found at https://www.prnewswire.com/news-
releases/ericsson-and-t-mobile-to-deploy-multi-band-nationwide-5g-
network-300605069.html.
    \16\ T-Mobile USA, Inc. Form 10K For the Year Ended December 31, 
2017 at 13, found at https://s22.q4cdn.com/194431217/files/
doc_financials/2017/annual/1500109984.pdf?O=PDF 
&T=&Y=&D=&FID=1500109984&iid=4091145.
---------------------------------------------------------------------------
    Just two weeks ago, at the Mobile World Congress in 
Barcelona, Sprint announced that it would be the first company 
to provide ``mass market'' 5G mobile services in 4 major cities 
(Dallas, Atlanta, Chicago and Kansas City) this May, with 
another 5 cities (Washington, DC, Phoenix, Los Angeles, New 
York and Houston) starting in June.\17\ In addition, the 
company's CEO has boasted that it has ``the BEST spectrum and 
assets to build an incredible nationwide #5G network that our 
customers will love.'' \18\ It said pre-merger that ``I have 
never seen a company with such a rich spectrum which is a sweet 
spot for 5G, I guess that gives us a tremendous opportunity for 
the years to come.'' \19\
---------------------------------------------------------------------------
    \17\ Eli Blumenthal, Sprint's 5G Network will go live this May in 
Chicago, Atlanta, Dallas and Kansas City, USA Today (Feb. 25, 2019) 
found at https://www.usatoday.com/story/tech/2019/02/25/sprint-5-g-
network-goes-live-in-may-in-four-cities/2973150002/.
    \18\ Marcelo Claure (@marceloclaure) Twitter (Mar. 9 2018 12:24 
p.m.).
    \19\ Transcript, Sprint Presentation at Deutsche Bank Leveraged 
Finance Conference, Fair Disclosure Wire (Oct. 2, 2018).
---------------------------------------------------------------------------
    Both companies are independently putting their money where 
their mouths are by heavily investing in 5G deployments. Both 
companies each have already committed to investing $5-6 billion 
annually until 2020 into their respective 5G deployments. In 
fact, their projected combined spend is roughly the sum of what 
each intended to spend on its own. Evidence in the record 
indicates that the companies aren't admitting how much it will 
cost for New T-Mobile to upgrade to 5G: Independent analysis 
suggests it will cost more than if Sprint did it alone.

B. The Companies' Claims That the Rural Americans Will Benefit 
                      are Unsubstantiated

    The merging companies claim that if allowed to merge, rural 
Americans will ``win big.'' But the companies provide little 
support for this assertion other than hand-waving. T-Mobile's 
owned LTE facilities currently serve 83.1% of the rural U.S. 
population, while Sprint serves just 56.2%. So, adding Sprint 
to the New T-Mobile adds nothing to T-Mobile's current rural 
coverage.
    Having spent nearly $8 billion to buy low band spectrum at 
the FCC's incentive auction in 2017, T-Mobile already has plans 
to extend its reach in rural areas. Importantly, this coverage 
doesn't include whatever spectrum T-Mobile may buy at upcoming 
auctions.
    Even as the carriers move to 5G, the claim that rural 
coverage will significantly increase is unsubstantiated. First, 
the parties can't seem to make up their minds whether Sprint 
will help T-Mobile's rural 5G coverage at all. On the one hand, 
the parties claim that Sprint's 2.5 GHz spectrum will enhance 
rural deployment for New T-Mobile. On the other hand, they 
argue that Sprint's 2.5 GHz spectrum is inadequate and that 
Sprint, standing alone, will ``not be a major competitor in 
most of rural America in the foreseeable future.'' \20\
---------------------------------------------------------------------------
    \20\ Applications of T-Mobile US, Inc. and Sprint Corporation for 
Consent to Transfer Control of Licenses and Authorizations, WT Docket 
18-197 at 65 (June 18, 2018).
---------------------------------------------------------------------------
    Finally, and perhaps most important, the merging parties, 
like their national mobile wireless/broadband brethren, 
understate the challenges and costs of bringing 5G connectivity 
to rural areas. In places where population density is low and 
the challenges of steep terrain and thick fauna are high, 
deployment is both a technological challenge and expensive and 
revenues are hard to come by.\21\ Moreover, the high speed 
``special access'' lines needed to bring 5G connectivity to 
rural America are also expensive and largely in the control of 
3 companies--AT&T, Verizon and Century Link. Indeed, because of 
the cost of these broadband data services and other 
infrastructure, many rural areas still don't yet have 4G 
connectivity. Policymakers should be extremely wary of any 
promise to bring 5G to significant parts rural America in the 
absence of significant subsidies any time soon, if ever.
---------------------------------------------------------------------------
    \21\ See generally, Larry Thompson and Warren Vande Stadt, 5G Is 
Not the Answer for Rural Broadband, Broadband Communities (March/April 
2017) found at https://www.bbcmag.com/rural-broadband/5g-is-not-the-
answer-for-rural-broadband.
---------------------------------------------------------------------------

 C. The Entire Point of a Merger Is To Lower Costs and Create 
    Efficiencies, Which Necessarily Include Eliminating Jobs

    On the question of whether this merger will result in more 
jobs, I defer to the testimony of Chris Shelton, the President 
of the Communications Workers of America, as well as CWA's 
comprehensive filings at the FCC, for a full accounting of the 
number and types of jobs that will be lost as a result of this 
merger. The numbers are significant--CWA estimates that 30,000 
jobs will be lost.
    I wish only to note that significant numbers of new jobs 
rarely, if ever come from massive mergers of this kind. Like 
other merging parties, T-Mobile and Sprint boasted when the 
deal was first announced that the combined companies will have 
``lower costs, greater economies of scale'' and ``cost 
synergies.'' The way that most merging companies achieve these 
goals is by eliminating redundancies, which typically means 
cutting jobs, among other things. One needn't be an economist 
to figure out that duplicative retail stores and call centers 
will be closed and that there is no need for two sets of middle 
managers and C-Suite executives.\22\
---------------------------------------------------------------------------
    \22\ While T-Mobile has promised to open 5 new call centers housing 
1,000 new employees each, this seems no more than a desperate PR stunt 
to win political support. T-Mobile may call these ``additional'' jobs, 
but they fail to say is how many call center and other jobs will be 
lost if the transaction is approved.
---------------------------------------------------------------------------

    VI. Sprint Is Neither a Failing nor Even an Ailing Firm

    It is axiomatic that companies seeking to merge will tell 
regulators in Washington, DC one thing and Wall Street another. 
In September 2018, Sprint told the FCC, among other things, 
that ``[d]espite achieving substantial cost reductions and 
stabilizing its financial position, Sprint has not been able to 
turn the corner with respect to its core business challenges . 
. . . Sprint tried a more localized approach in an attempt to 
drive growth, but continues to face declining subscribers and 
revenue[.]'' \23\ Just 3 months later, Sprint issued a year-end 
press release touting ``a banner year for the Sprint network'' 
in which it made ``a massive investment to drive strong 
improvements in our network performance.'' \24\
---------------------------------------------------------------------------
    \23\ Letter from Regina M. Keeney, Counsel for Sprint Corp., to 
Marlene Dortch, FCC, WT Docket 18-197, Attachment C at 2 (Sept. 25 
2018).
    \24\ Dr. John Saw, Celebrating a Year of Sprint Milestones on our 
Path to 5G (Dec. 18, 2018) found at https://newsroom.sprint.com/2018-
milestones-on-path-to-5g.htm.
---------------------------------------------------------------------------
    One need only look at what Sprint told Wall Street earlier 
this year, through its recently released earnings from the 3rd 
quarter of 2018, to see that it is not only not a ``failing 
firm'' for purposes of scrutinizing a merger, it isn't even 
ailing. In fact, Sprint is about as healthy a company as it has 
been in many years. As Sprint CEO Michel Combes said on January 
31, ``[w]e delivered solid financials, increased network 
investments as we prepare for our mobile 5G launch, and the 
continued digital transformation of our company.'' \25\
---------------------------------------------------------------------------
    \25\ Sprint Reports Continued Year-Over-Year Growth In Wireless 
Service Revenue With Fiscal Year 2018 Third Quarter Results (Jan. 31, 
2019) (``Sprint Q3 2018 Report'') found at https://
investors.sprint.com/news-and-events/press-releases/press-release-
details/2019/Sprint-Reports-Continued-Year-Over-Year-Growth-In-
Wireless-Service-Revenue-With-Fiscal-Year-2018-Third-Quarter-Results/
default.aspx.
---------------------------------------------------------------------------
    Sprint's Q3 results showed, among other things, its second 
consecutive quarter of year-over-year growth in wireless 
service revenue and its sixth consecutive quarter of postpaid 
additions. The number of postpaid additions in the quarter were 
309,000, an improvement of 53,000 year-over-year.\26\
---------------------------------------------------------------------------
    \26\ Sprint Q3 2018 Report, supra.
---------------------------------------------------------------------------
    In addition, Sprint's postpaid service revenue grew year-
over-year for the first time in five years and its pre-paid 
service revenue grew year-over-year for the fifth consecutive 
quarter. The company also reported its 12th consecutive quarter 
of operating income and the highest fiscal third quarter 
adjusted EBITDA (Earnings before interest, tax, depreciation 
and amortization) in 12 years.\27\
---------------------------------------------------------------------------
    \27\ Sprint Q3 2018 Report, supra.
---------------------------------------------------------------------------
    Sprint's quarterly network investments of $1.4 billion more 
than doubled year-over-year and increased approximately $150 
million ``as the company made continued progress on executing 
its Next-Gen Network plan.'' \28\
---------------------------------------------------------------------------
    \28\ Sprint Q3 2018 Report, supra.
---------------------------------------------------------------------------
    The merger proponents, however, point to negative adjusted 
free cash flow of $908 million Sprint reported for Q3. But this 
was primarily due to ramped up capital investment of $1.4 
billion. In fact, in the immediate prior quarter (FY Q2 2018), 
Sprint reported a positive cash flow of $525 million. Despite 
this recent drawdown, Sprint currently has almost $9 billion of 
liquidity, including $6.8 billion in cash.\29\
---------------------------------------------------------------------------
    \29\ Sprint Corporation (S) Q3 2018 Earnings Conference Call 
Transcript (Jan. 31, 2019) found at https://www.fool.com/investing/
2019/01/31/sprint-corporation-s-q3-2018-earnings-conference-c.aspx.
---------------------------------------------------------------------------
    Finally, Sprint hasn't acknowledged the additional measures 
that could be used to strengthen the company's financial 
position even further. For example, Sprint's owner SoftBank 
holds more than $31 billion (more than 3 trillion yen) in cash 
and cash equivalents across its portfolio that can be invested 
into Sprint.\30\ SoftBank's Vision Fund has more than $90 
billion (10 trillion yen) in capital from both SoftBank and 
third parties, which it uses to invest in cutting-edge 
technology companies.\31\
---------------------------------------------------------------------------
    \30\ SoftBank Group Corp., Annual Report FY 2018 at 1 (July 20, 
2018) found at https://cdn.group.softbank/en/corp/set/data/irinfo/
financials/annual_reports/pdf/2018/soft_bank 
_annual_report_2018_001.pdf..
    \31\ SoftBank Group Corp., Consolidated Financial Report For the 
Three-month Period Ended June 30, 2018 at 22 (Aug. 6, 2018) found at 
https://cdn.group.softbank/en/corp/set/data/irinfo/financials/
financial_reports/pdf/2019/softbank_results_2019q1_001.pdf.
---------------------------------------------------------------------------
    Policymakers should absolutely believe what Sprint has told 
Wall Street--its financial picture gets brighter with each 
quarter, and its continuing network improvements will take the 
company to even greater success in the future as a stand-alone 
firm.

                           Conclusion

    I am a proud and loyal T-Mobile customer and a big fan of 
both its CEO and its Government Relations staff. I'm not a fan 
of this merger, because the harms to consumers who value good 
service and innovative service plans far outweigh the supposed 
benefits. Thank you again for inviting me to testify.

    Mr. Cicilline. Thank you, Ms. Sohn.
    I now recognize Ms. Scurato for five minutes.

                  TESTIMONY OF CARMEN SCURATO

    Ms. Scurato. Chair Cicilline, Ranking Member Sensenbrenner, 
Chair Nadler, and Subcommittee Members, thank you for having 
me.
    My name is Carmen Scurato, and I am a Senior Policy Counsel 
at Free Press with 1.4 million Members across all 50 states, 
the District of Columbia, and Puerto Rico.
    We strongly oppose this merger. Free Press's extensive 
research shows the disproportionate harms it would cause to 
low-income communities and people of color who are more likely 
to be on the wrong side of the digital divide and more often 
rely on mobile phones for their only means of connecting to the 
internet.
    While my organization signed protective orders at the FCC 
to assess the merger applicants' data and claims, I am not a 
signatory. That means everything I say today is based on 
publicly available data, but let me be clear. No matter where 
we look, nothing about this deal's benefits, all of which are 
speculative and unenforceable, offsets its immediate and 
permanent harms.
    Sprint and T-Mobile and their prepaid brands, Boost, 
Virgin, and Metro, are the dominant providers of mobile service 
for low-income people. More than 30 percent of Metro and Boost 
subscribers report yearly incomes of $25,000 or less.
    Due to structural and systemic racism, people of color are 
disproportionately represented in these demographics. T-Mobile 
and Sprint customers are far more likely to be people of color 
than are AT&T and Verizon's. Fifty-six percent of T-Mobile 
subscribers in 2018 identified as people of color as did 45 
percent of Sprint's.
    The reason that Members of these communities choose Sprint 
and T-Mobile is very clear. Their plans cost less. As our 
research confirms, these two carriers compete with one another 
vigorously. They are each other's closest competitors.
    They serve price-conscious customers that AT&T and Verizon 
are content and able to ignore. Both T-Mobile and Sprint have 
been mavericks, taking customers from each other and from the 
Big 2 carriers, as well, after the government rejected 
previously proposed horizontal mergers, like this one.
    My full testimony touches on T-Mobile's inflated 5G 
efficiency claims and exaggerated rumors of Sprint's death used 
to justify this deal, but I will focus my remaining time on 
three facts illustrating the harms to these most impacted 
communities.
    First, no matter how antitrust enforcers define the product 
markets, this deal would consolidate already highly-
concentrated markets and it would eliminate choice for 
customers who want or need to pay less for essential 
communication services.
    Our FCC filings document how T-Mobile and Sprint's prepaid 
and postpaid brands compete, countering each other's 
innovations and offers in ways that benefit price-conscious 
customers and exert some discipline on Verizon and AT&T, as 
well.
    T-Mobile and Sprint both offer lower-priced options than 
their larger rivals. Don't believe the parties' funny math 
suggesting that having fewer competitors somehow strengthens 
competition. This is a four to three merger nationally and 
closer to a three to two in the prepaid market.
    It would reduce choice for all lower-priced plans that 
don't require customers to pass discriminatory credit checks or 
finance devices through the carrier.
    Second, the merger would increase prices. In their filings, 
Sprint and T-Mobile don't even hide the likelihood that prices 
would go up for their postpaid and prepaid customers alike. 
That is right. Their own economic models say prices would go 
up.
    T-Mobile's price pledge is riddled with loopholes and does 
nothing to allay this concern. T-Mobile announced that legacy 
plans would continue, and I quote, ``for three years or until 
better plans that offer a lower price or more data are made 
available.''
    This mockery of a promise is meaningless. Prices will stay 
the same unless, of course, T-Mobile decides to raise them. 
Just as T-Mobile did with its initial attempts to hide this 
fact, the carrier gets to decide whether a more expensive plan 
is better for you, even if it offers more than many customers 
might want, need, or be able to afford.
    Third, this merger would mean massive consolidation in the 
wholesale wireless market. Reducing wholesale supply would 
raise costs passed along to the retail customers of all 
resellers. Wholesale is used by carriers without their own 
networks, including most Lifeline carriers, to offer service at 
resale.
    Throughout my career, I have been a strong defender of 
Lifeline because it helps the most vulnerable in society stay 
connected, providing just $9.25 a month to defray the high 
cost.
    Lifeline is dependent on a well-functioning wholesale 
market. Consolidation would further widen the quality gap 
between wireless Lifeline offerings and non-subsidized plans.
    In sum, you should closely scrutinize the too-good-to-be-
true claims made by these two companies. You should also 
consider the real-world impacts on communities that struggle 
with high-priced connectivity and often find themselves on the 
wrong side of the digital divide.
    Thank you, and I look forward to your questions.
    [The statement of Ms. Scurato follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Cicilline. Thank you very much.
    The chair now recognizes Ms. Bennet for five minutes.

                   TESTIMONY OF CARRI BENNET

    Ms. Bennet. Chair Cicilline and Ranking Member 
Sensenbrenner, and Members of the Subcommittee, my name is 
Carrie Bennet, and I am here on behalf of the Rural Wireless 
Association.
    Thank you for this opportunity to testify today on the 
impact the Proposed T-Mobile/Sprint Merger will have on rural 
Americans.
    RWA opposes this merger. This merger is bad for 
competition. It is bad for consumers, especially in rural 
areas, who will experience fewer choices, price increases, and 
substandard service. It should be denied.
    T-Mobile has had more than 20 years to build out in rural 
America. Let's face it. T-Mobile is making a lot of promises 
about how it will expand coverage in rural America and improve 
service for these Americans, but based on its track record, we 
have no reason to believe that it will do so.
    I am going to run through four areas of concern. First, 
roaming. Roaming arrangements are important to rural Americans. 
Roaming keeps urban, suburban, and rural Americans connected. 
Sprint has historically worked with rural carriers to ensure 
rural Americans have robust wireless service. T-Mobile has not.
    According to our Members, T-Mobile's roaming rates are 20 
times higher than Sprint's and T-Mobile's existing roaming 
agreements are one-sided. T-Mobile will frequently enter into 
unilateral agreements under which rural carrier subscribers can 
roam on T-Mobile's network with no possibility of T-Mobile 
subscribers roaming on the rural carriers' networks.
    In such cases, T-Mobile has simply chosen to deprive T-
Mobile's own customers of coverage in rural areas rather than 
pay the rural carrier for the network access. This means that 
in those areas T-Mobile's customers cannot be reached and are 
basically off the grid.
    Do we really want new T-Mobile's 100 million plus 
subscribers, more than one-third of the market, to be denied 
service in rural America?
    Second, 5G build-out in rural America. T-Mobile's repeated 
claims about new T-Mobile's future 5G rural build-out are 
unfounded. When it comes to 5G networks and some of the 
potential rural applications, like precision agriculture and 
remote health care, low latency is a must.
    The facilities needed for 5G technology cannot rely on 
satellite and microwave due to their high latency. Fiber must 
be deployed and deploying fiber takes time and money. Neither 
T-Mobile nor Sprint have expended resources to build out fiber 
in rural America.
    Without a commitment to lay fiber in these undeveloped 
areas, their claims of building out future 5G broadband 
networks ring hollow.
    Acquiring Sprint does not give New T-Mobile the fiber it 
needs to serve rural America with 5G or in-home broadband. 
Disallowing the merger will enable hundreds of rural broadband 
providers across America to work with both Sprint and T-Mobile 
to build out broadband more quickly.
    Third, rural call completion. Less than a year ago, the FCC 
found that T-Mobile failed to correct ongoing problems with 
delivery of calls to rural consumers. In fact, T-Mobile 
admittedly inserted false ring tones into these calls so that 
the caller believed the call was ringing on the other end when 
it wasn't.
    Aside from blatantly breaking the law, T-Mobile severely 
hindered rural consumers from running their businesses, 
communicating critical information to family and friends, and 
reaching emergency service personnel. This callous behavior in 
an effort to save money has harmed rural Americans and we 
believe that T-Mobile's destructive behavior will continue, 
perhaps even more aggressively, once its rival Sprint is 
eliminated.
    Finally, false broadband mapping claims. Our Members have 
serious concerns about T-Mobile's broadband maps submitted in 
the FCC's Mobility Fund proceeding. That fund was created to 
provide $4.5 billion to mobile carriers to help better connect 
rural Americans.
    To make sure it knows where the money is needed the most, 
the FCC asked wireless carriers to submit maps indicating where 
each carrier offers qualifying 4G broadband coverage.
    According to testing done by our Members, when T-Mobile 
submitted its data, the company vastly overstated its rural 
coverage to make its reach seem bigger than it is. When rural 
carriers went to test T-Mobile's claims, 95.8 percent of the 
tests showed speeds below the threshold demanded by the FCC or 
no 4G broadband service at all, and many of the places where T-
Mobile certified it had coverage cell sites had not even been 
put into operation. If not corrected, funding will not be 
available in these rural areas.
    As part of its public interest review, the FCC must 
determine whether T-Mobile has been honest in its dealings with 
the FCC. Our member's drive tests strongly suggested it has 
not.
    In sum, a string of broken promises does not bode well for 
rural Americans and this deal should be denied.
    Thank you, and I look forward to your questions.
    [The statement of Ms. Bennet follows:]

                    STATEMENT BY MS. BENNET

                    Introduction and Summary

    Chairmen Nadler and Cicilline, Ranking Members Collins and 
Sensenbrenner, and Members of the Subcommittee, thank you for 
this opportunity to testify today to discuss the impact that 
the proposed T-Mobile/Sprint merger will have on rural America. 
I am here on behalf of the Rural Wireless Association, Inc. 
(RWA), which represents about 50 rural wireless carriers, each 
with fewer than 100,000 subscribers and the majority with less 
than 10,000 subscribers.\1\
---------------------------------------------------------------------------
    \1\ See Rural Wireless Ass'n, https://ruralwireless.org/.
---------------------------------------------------------------------------
    RWA's Members consist of both independent wireless carriers 
and wireless carriers that are affiliated with rural telephone 
and broadband companies. RWA Members have provided wireless 
services in their respective rural communities for more than 50 
years. Our Members live and work in rural America, and they 
make sure that rural America is not left behind.
    Small, rural-based wireless service providers offer low-
cost wireless plans to rural Americans and operate networks 
which promote public safety, encourage innovation and economic 
development, enable more efficient energy and agriculture 
production, and support telehealth and distance learning 
applications.
    RWA opposes the proposed merger of T-Mobile and Sprint. If 
approved, this horizontal merger would eliminate one of only 
four nationwide competitors, leaving only three nationwide, 
facilities-based wireless carriers. This consolidation will 
force rural Americans to pay more money for wireless services. 
In addition, it will undermine the system of roaming that is a 
key component of telecommunications and broadband access in 
rural communities and degrade service quality. In short, this 
merger will do nothing to help rural Americans or those 
traveling in rural America, but it will do much to hurt them.

 The Proposed Transaction Will Raise Prices for Rural Americans

    The primary question facing the Department of Justice (DOJ) 
and Federal Communications Commission (FCC or Commission) is 
whether the elimination of Sprint as an independent, nationwide 
carrier will hurt competition and lead to increased prices, 
thereby harming the public interest. The answer is an 
unqualified yes. Such price increases will be acutely felt by 
rural consumers and those traveling in rural America. The 
elimination of Sprint will not only remove a facilities-based 
carrier that supports its own well-known Sprint and Boost 
retail operations, it will completely remove a nationwide 
roaming option for small rural carriers, as well as a wholesale 
network option for mobile virtual network operators (MVNOs), 
machine-to-machine (M2M) service providers, and other Internet 
of Things (IoT) service providers.
    Recently, in an attempt to counter evidence showing that 
this transaction will increase prices for American consumers, 
T-Mobile CEO John Legere promised that ``T-Mobile and Sprint 
legacy rate plans will continue as New T-Mobile plans for three 
years after the merger or until better plans that offer a lower 
price or more data are made available.'' \2\ In general, this 
self-imposed behavioral remedy is cold comfort for millions of 
Americans because there are countless ways New T-Mobile can 
raise prices while still complying with this supposed ``rate 
plan'' freeze.
---------------------------------------------------------------------------
    \2\ Letter from John Legere, CEO, T-Mobile, to Ajit Pai, Chairman, 
FCC, WT Docket No. 18-197 (Feb. 4, 2019).
---------------------------------------------------------------------------
    Worse still, the commitment does nothing to protect rural 
Americans who purchase wireless plans from the MVNOs that 
currently rely on Sprint for wholesale service. Mr. Legere 
makes no commitment to maintain existing prices paid by MVNOs 
to Sprint.\3\ If anything, the promise to freeze rate plans for 
New T-Mobile customers only increases the combinedvcompany's 
incentive to raise prices for New T-Mobile's MVNO wholesale 
customers. Of course, those increased costs to these MVNOs 
would have to be passed on to rural Americans. As discussed 
below, T-Mobile has not--and will not--commit to extending 
Sprint's wholesale roaming agreements with rural carriers, 
leaving them vulnerable to ever-increasing rate hikes.
---------------------------------------------------------------------------
    \3\ See Id. at 7.
---------------------------------------------------------------------------

The Proposed Transaction Will Harm Rural America by Eliminating 
                   a Critical Roaming Partner

    The merger will result in particular harm to Americans who 
travel, work, or reside within rural areas. Sprint has 
historically worked with rural carriers to ensure rural 
Americans have access to robust mobile wireless service. Sprint 
has offered rural carriers, including RWA Members, reciprocal, 
strategic roaming agreements at commercially reasonable rates, 
providing rural carriers important pro-consumer benefits and 
significant flexibility. In doing so, Sprint has been an 
exception; the other nationwide carriers have not demonstrated 
a willingness to engage in such commercially reasonable 
arrangements. While carriers cannot publicly disclose agreement 
specifics, RWA understands from its Members that the Sprint 
agreements do not incentivize Sprint or RWA Members to throttle 
data usage because the agreed-upon roaming rates are 
commercially reasonable, thereby providing a better experience 
for their respective customer bases. In fact, according to our 
Members, Sprint's roaming rates are 20 times lower than T-
Mobile's.
    RWA Members are concerned that the terms in their roaming 
agreements with Sprint will not be included in any roaming 
agreements with New T-Mobile, and that New T-Mobile has no 
plans to allow its customers to roam on rural carrier 
networks--even in areas where its own network is substandard or 
nonexistent.
    Absent a guarantee that favorable Sprint roaming terms will 
continue, RWA Members will be forced to accept T-Mobile's 
existing one-sided roaming agreements. While T-Mobile is 
required by the Commission's rules to allow the customers of 
other carriers to roam on its network, T-Mobile is not required 
to allow its customers to roam on other carriers' networks, 
even where its own network is substandard or non-existent. T-
Mobile will frequently enter into unilateral roaming agreements 
under which the rural carrier's subscribers can roam on T-
Mobile's network, but with no possibility of T-Mobile's 
subscribers roaming on the rural carrier's network. In such 
cases, T-Mobile has simply determined that it is better for its 
business for its customers to do without any coverage in rural 
areas, rather than pay the rural carrier for network access. As 
discussed below, the cost of accessing the rural carrier's 
network is determined by T-Mobile, so T-Mobile's argument that 
the cost to use a rural carrier's network is too expensive is 
baseless and self-serving. This means T-Mobile's customers 
cannot access wireless services when traveling in rural areas. 
The result? They cannot be reached and are basically off the 
grid, all because T-Mobile chooses to restrict access to the 
rural carriers' networks.
    Roaming arrangements are particularly important to rural 
Americans who depend upon reliable access to advanced mobile 
services in order to communicate with others. This need to 
access 4G (and soon 5G) services does not end when a rural 
consumer leaves her home or job in rural America. Rural 
consumers still need the capability to access mobile wireless 
services in non-rural U.S. markets where their local hometown 
carrier does not provide service. Likewise, wireless customers 
in urban and suburban U.S. markets should have access to the 
critical coverage provided by RWA member carriers, who in many 
cases operate the only network in a rural area. This mutual 
dependency makes bilateral, inter-carrier voice and data 
roaming critical from both a commercial and public safety 
perspective. Reciprocal roaming keeps urban, suburban, and 
rural America connected. Sprint has been a valuable partner in 
this system, while T-Mobile has consistently refused to enter 
into reciprocal roaming agreements with RWA Members.
    What does this mean? If this merger is approved, rural 
consumers and consumers traveling through rural America will 
pay higher rates due to the increased roaming rates set by New 
T-Mobile. Of the four nationwide carriers, Sprint is the only 
one that offers anything approximating commercially reasonable 
roaming rates, terms, and conditions to rural carriers. T-
Mobile has not shown that it wants rural carriers to have 
affordable access to its nationwide network. If a rural carrier 
had such access, the rural carrier could offer its rural 
customers not only robust rural coverage on its network, but 
also affordable coverage when the rural customer chooses to 
travel outside the rural carrier network (i.e., affordable 
nationwide service). When a rural carrier's customer regularly 
travels outside a rural area, the cost to support that customer 
accessing T-Mobile's network through a roaming agreement can be 
astronomical. Similarly, if a rural customer purchases a T-
Mobile handset and plan, T-Mobile denies access to the rural 
carrier's network so that the device does not work when the T-
Mobile customer is in the rural carrier's service area. Do we 
really want to force rural Americans to buy two plans--one from 
a rural carrier and one from New T-Mobile--just to get 
consistent coverage? That would double the monthly price a 
consumer would pay for service.
    Sprint, on the other hand, has not blocked access, 
throttled data usage, or established unreasonable commercial 
roaming rates. In fact, RWA Members have reported that the 
voice and data roaming rates they currently pay to Sprint are 
one-twentieth (1/20th) of what they pay T-Mobile for comparable 
coverage and service. If Sprint disappears and T-Mobile's rates 
are adopted, roaming costs could go up by 1,900 percent, 
jeopardizing the ability of rural carriers to offer outbound 
roaming to their consumers. Without outbound roaming, rural 
carriers cannot offer a compelling retail product to rural 
consumers. Absent that capability, they will be forced to exit 
the business, leaving an untold number of Americans without any 
access to mobile wireless communications in rural America. 
Obviously, loss of coverage in rural America is not in the 
public interest and is one of the many harmful anticompetitive 
effects of this proposed merger.
    New T-Mobile will have zero incentive to provide 
commercially reasonable roaming rates, terms, and conditions to 
RWA Members. Without access to nationwide roaming (at per-
megabyte or per-minute bilateral rates that are lower than each 
carrier's existing retail rates, or even each carrier's 
wholesale/MVNO rates), rural carriers cannot offer nationwide 
rate plans at levels that are competitive with the nationwide 
carriers. This puts rural carriers at a competitive 
disadvantage. Specifically, because the flow of roaming traffic 
is one-way (i.e., only rural to T-Mobile), the wholesale 
roaming rates paid by rural carriers are often inflated. This 
is because T-Mobile entered into negotiations knowing that it 
would never allow outbound (i.e., T-Mobile to rural) roaming. 
Higher roaming rates mean that rural carriers are either forced 
to raise their own retail rates or absorb the roaming charges, 
which comes out of the rural carrier's profits. When rural 
carriers pay higher roaming rates, they are forced to reduce 
the extent of network buildout and reduce the funds available 
for other operating expenses, resulting in denigrated service 
in rural areas. In these instances, rural consumers and rural 
carriers lose.
    In addition, T-Mobile's preclusion of its own customers 
from accessing rural carriers' networks--either by blocking by 
location area codes (LAC) or denying the exchange of reciprocal 
roaming traffic--makes rural carriers more reliant on Universal 
Service Fund (USF) subsidies. RWA emphasizes that many of these 
LAC restrictions and roaming denials are not in markets where 
T-Mobile has its own network--they are in markets where T-
Mobile has no reliable coverage of its own. If T-Mobile allowed 
its customers to access those networks and paid rural carriers 
for use of their networks, the rural carriers would have 
revenue to support their networks, reducing reliance on USF 
funding. RWA notes that T-Mobile collects a universal service 
fee from its own customers to support these high cost networks 
and then turns around and denies its customers access to those 
very same networks T-Mobile's customers subsidize.
    Sprint, on the other hand, has been willing to allow its 
customers to roam off-network. Accordingly, if T-Mobile is 
allowed to merge with Sprint and continues to block access to 
rural carriers' networks, then tens of millions of existing 
Sprint customers will experience a reduction in roaming 
coverage availability, another major public interest harm.
    Furthermore, Sprint has leased its spectrum to rural 
carriers in rural areas to enable them to build out networks 
that serve both rural Americans and those traveling in rural 
America. Given the difficulty that rural carriers often have in 
accessing spectrum, these lease agreements are critical. There 
is no reason to believe they will continue if the proposed 
merger is consummated. Specifically, RWA Members are concerned 
that their spectrum leases with Sprint will not be renewed by 
New T-Mobile, which would cause rural carriers to lose coverage 
and force even more consumers to go without service.
    Despite T-Mobile's claims that it will expand service to 
underserved communities post-merger, the reality is clear: T-
Mobile has neglected rural America for over 20 years. T-Mobile 
has focused most of its energy on urban areas. Indeed, T-
Mobile's retail presence in rural America is virtually non-
existent, presumably because it has little or no coverage in 
rural America. After all, there is no point in having a rural 
retail store if there is no coverage in the area.
    The lack of retail stores came to light during the FCC's 
Mobility Fund Phase II challenge process when rural carriers 
sought to obtain T-Mobile devices to challenge alleged 4G LTE 
coverage in rural areas. To participate in the challenge 
process, RWA Members often had to drive two or more hours each 
way (over 250 miles round trip) to purchase T-Mobile devices at 
the closest T-Mobile retail store. The experience of RWA 
Members is that when T-Mobile does extend service to a ``rural 
county,'' it typically builds a cell in the county seat, covers 
major State and federal roadways, and ignores the rest of the 
county. In short, T-Mobile is not focused on rural Americans, 
and there is no reason to believe that will change if this 
merger is approved.

5G Needs Fiber--An Input Both T-Mobile and Sprint Lack in Rural 
                            America

    The repeated claims about the extent of New T-Mobile's 
future 5G rural buildout are unfounded. Rural areas are 
difficult to serve, and the proposed transaction does nothing 
to improve the challenging economics of undertaking a 5G 
greenfield build in rural areas. While Sprint and T-Mobile each 
have ample spectrum today to initiate facilities-based service 
in rural markets, both have elected to focus their attention on 
urban and suburban portions of the country. The proposed merger 
will not change their major market focus. Moreover, both 
companies lack fiber deployment in rural areas, a critical 
input for 5G services.
    When it comes to 5G networks and some of their potential 
applications - autonomous vehicles, precision technology and 
remote health care--lowering latency is a must. The backhaul 
facilities needed for 5G technology cannot rely on satellite 
and microwave backhaul technology due to their high latency. 5G 
wireless cells must be placed in close proximity (300 to 500 
feet) to consumers,\4\ and fiber optic backhaul must be present 
nearby each of those cell sites. Deploying fiber takes time and 
money. Google, one of the best financed companies in the United 
States, exited the fiber business after realizing that building 
fiber networks is not for the faint of heart. Building fiber 
networks that support both wireless and wireline networks is a 
capital intensive and costly undertaking--one that rural 
telephone companies have assumed across the United States by 
banding together in statewide consortia to connect rural areas 
of their individual states. Because neither T-Mobile nor Sprint 
have expended resources to build out fiber networks in rural 
America, T-Mobile's claims of building out future 5G wireless 
broadband networks in rural America is without foundation 
absent a commitment to lay fiber in these greenfield areas.
---------------------------------------------------------------------------
    \4\ Vantage Point, White Paper: Evaluating 5G Technology (rel. July 
10, 2017).
---------------------------------------------------------------------------
    In short, T-Mobile's acquisition of Sprint is not going to 
change the fact that both companies lack the fiber buildout 
they need to serve rural America with 5G. By keeping both T-
Mobile and Sprint separate and competing, hundreds of rural 
broadband providers across rural America will be able to work 
with both to more quickly build out LTE and 5G by leveraging 
and expanding the rural fiber networks.

   T-Mobile Has a Poor Track Record of Rural Call Completion

    The harm T-Mobile has inflicted on its own customers is not 
restricted to denying them access to rural wireless networks--
it extends to denying those same customers access to rural 
landline telephone networks as well. Less than a year ago--on 
April 16, 2018--the FCC announced that it had ``reached a 
settlement concluding its investigation into whether T-Mobile 
USA, Inc. violated the Communications Act when it failed to 
correct ongoing problems with delivery of calls to rural 
consumers and whether it violated the FCC Rule that prohibits 
providers from inserting false ringtones with respect to 
hundreds of millions of calls.'' \5\ That same day, the FCC 
released a Settlement Order,\6\ which adopted a Consent Decree 
\7\ entered into between the FCC and T-Mobile. In the Consent 
Decree, the FCC determined that T-Mobile inserted false 
ringtones into hundreds of millions of telephone calls placed 
by T-Mobile customers each year. The FCC's investigation 
revealed a pattern of this illegal practice impacting customers 
of rural local exchange carriers (LECs). Instead of terminating 
these calls, T-Mobile injected false ringtones, leading the T-
Mobile customer to think that the rural LEC customers were not 
picking up their landline telephones. In reality, the call was 
passed to an intermediate provider, where it was then either 
placed in a never-ending loop or transferred to one or more 
additional intermediate providers. Eventually, the calls either 
dropped or the T-Mobile customers hung up. T-Mobile admitted in 
the Consent Decree that it violated the FCC's 2014 prohibition 
against the insertion of false ringtones and failed to correct 
problems with its intermediate providers' completion of calls 
to customers of rural LECs. T-Mobile's actions were extremely 
harmful to both its own wireless customers and landline 
customers served by rural LECs across the country. And, despite 
the FCC informing T-Mobile of numerous customer complaints and 
expressly prohibiting the practice, T-Mobile engaged in the 
illegal practice of inserting false ringtones into calls 
destined for rural consumers for four years.
---------------------------------------------------------------------------
    \5\ Press Release, FCC Reaches $40 Million Settlement With T-Mobile 
for Rural Call Completion Violations (rel. Apr. 16, 2018).
    \6\ T-Mobile USA, Inc., File No.: EB-IHD-16-00023247, Order, DA 18-
373 (rel. April 16, 2018).
    \7\ T-Mobile USA, Inc., File No.: EB-IHD-16-00023247, Consent 
Decree, DA 18-373 (released April 16, 2018).
---------------------------------------------------------------------------
    Aside from blatantly breaking the law, T-Mobile severely 
hindered rural consumers seeking to run their businesses; 
communicate important and critical information to family and 
friends; and reach emergency service personnel, medical 
professionals, and law enforcement in affected rural areas. The 
callous behavior T-Mobile engaged in to save money on 
terminating rural calls underscores the fact that T-Mobile's 
attitude toward rural consumers is egregiously anticompetitive. 
T-Mobile's actions with respect to rural call completion, 
combined with its behavior in the context of roaming and 
spectrum management, demonstrate that T-Mobile has a general 
disregard for rural consumers and rural carriers. RWA believes 
that T-Mobile's anti-rural consumer behavior will continue, 
perhaps even more aggressively, once its rival Sprint is 
eliminated.

 The FCC Should Investigate T-Mobile's 4G LTE Coverage Claims 
                 Before It Approves the Merger

    The FCC's Mobility Fund was created to provide $4.5 billion 
to mobile carriers over the next 10 years to help connect rural 
Americans who lack quality wireless service. To make sure it 
knows where the money is most needed, the FCC has asked 
wireless carriers to submit maps indicating where each carrier 
offers 4G LTE coverage with speeds of 5 megabits per second 
download or faster. According to a study done by RWA, when T-
Mobile submitted its data, the company vastly overstated its 
rural coverage to make its reach seem bigger than it is. When 
rural carriers went to test T-Mobile's claims, 95.8 percent of 
their tests showed speeds below the threshold demanded by the 
FCC--or no 4G LTE service at all. In many of the places where 
T-Mobile certified it had coverage, cell sites had not even 
been put into operation. FCC acceptance of the faulty T-Mobile 
coverage data would mean that rural carriers who serve rural 
consumers would be denied funds, even though no alternative 
sources of service exist, causing a loss of service to 
customers of rural carriers who rely on this funding.
    The FCC is currently investigating this issue. But, before 
the FCC can make a public interest determination regarding this 
proposed merger, it must first know that T-Mobile has been 
honest in its dealings with the Commission. Our Members' drive 
tests strongly suggest that it has not. The Commission cannot 
approve a merger when there is an unresolved enforcement 
proceeding pending against the merging parties.

                           Conclusion

    This merger is bad for competition. It is bad for 
consumers, especially in rural areas, who will experience 
higher rates and lower quality service. It will degrade the 
quality of telephone service in rural areas. It should not be 
denied.

    Mr. Cicilline. Thank you, Ms. Bennet.
    Mr. Wallsten is now recognized for five minutes.

                  TESTIMONY OF SCOTT WALLSTEN

    Mr. Wallsten. Chair Cicilline, Ranking Member 
Sensenbrenner, and Members of the Subcommittee, thank you for 
the opportunity to testify on the pending merger between T-
Mobile and Sprint.
    My name is Scott Wallsten. I am an economist and President 
and Senior Fellow at the Technology Policy Institute. TPI is a 
nonprofit/nonpartisan think tank that focuses on the economics 
of innovation, technological change, and related regulation.
    TPI takes no institutional position, so this testimony 
reflects only my views.
    The key question when reviewing the pending merger is 
whether the expected efficiencies gained from combining the 
third and fourth largest wireless firms outweigh the 
possibility that the combined firm could harm competition.
    To address this question, I make four points. First, this 
merger involves more than the usual level of uncertainty 
because it involves the nascent technology just beginning to be 
deployed. Because we know so little about 5G, claims regarding 
optimum market structure are speculative and difficult to 
evaluate.
    Second, the empirical literature evaluating four to three 
wireless mergers is inconclusive. Some studies find that prices 
increased after such mergers, some find that prices decreased 
after such mergers, and some find that prices did not change.
    Third, the uncertainty about new technology and the lack of 
evidence that four to three mergers necessarily lead to 
competitive harms mean the government has little basis for 
blocking the merger.
    Fourth, because T-Mobile and Sprint may serve more than 50 
percent of wholesale and low-income consumers, antitrust 
authorities should carefully consider the potential effects of 
the merger on those groups.
    T-Mobile and Sprint argue that combining their resources, 
particularly spectrum, will allow them to build a higher-
quality, more robust 5G network more quickly than either firm 
could on its own. Opponents contest this assertion.
    Evaluating this claim and whether it would benefit 
consumers, if true, is difficult because we know little about 
5G supply and almost nothing about demand. A market with more 
firms experimenting with different technological approaches and 
business models may yield better social outcomes.
    On the other hand, given the risky nature of investing in a 
new technology and likelihood of making mistakes, a market with 
fewer but stronger firms may yield better social outcomes.
    Real-world evidence of the effects of previous four to 
three wireless mergers finds that even with the current 
technology, mergers did not consistently lead to one particular 
outcome. One paper that reviewed 13 studies of four to three 
mergers found no consistent effect on prices.
    In short, real-world experience provides little reason to 
believe one outcome is more likely than the other. That also 
means we do not have consistent evidence that the merger would 
necessarily harm consumers or competition overall. Without such 
evidence, the government has little reason to block the merger.
    Opponents, however, have also raised concerns about low-
income and wholesale consumers and the horizontal merger 
guidelines note that the government should consider how a 
merger might affect different groups of customers.
    While T-Mobile and Sprint serve about 30 percent of all 
subscribers, available public data suggests they serve far 
larger shares of wholesale and low-income subscribers. 
Wholesale and low-income service overlap but are not identical.
    Facilities-based providers sell wholesale network access to 
other companies who resell it under their own brands. Resellers 
offer traditional wireless services, often prepaid, and 
internet of things connectivity.
    Estimates suggest that T-Mobile and Sprint currently 
provide more than half of all wholesale connections and their 
annual reports show increasing number of wholesale subscribers. 
Low-income subscribers probably rely disproportionately on 
prepaid plans but not all prepaid plans rely on wholesale 
networks and not all wholesale-based plans are prepaid. Low-
income and wholesale services are therefore related but 
different.
    One survey suggests that T-Mobile and Sprint directly serve 
almost half of consumers of annual incomes of less than 
$50,000. The true number is probably higher when also 
considering wholesale.
    The combined T-Mobile/Sprint holding more than 50 percent 
of subscribers in these segments is not necessarily a problem. 
Whether it is depends on whether they could profitably raise 
prices without encouraging more entry by AT&T, Verizon, or 
others.
    Antitrust authorities who presumably have access to the 
actual data, the proprietary data, should study these segments 
carefully and evaluate whether some conditions may be 
necessary.
    The government can do a lot to promote competition. The FCC 
and NTIA should continue making flexible use spectrum 
available. The FCC should continue removing obstacles to 
hopeful entrants, like Low-Earth Orbit satellite broadband 
companies, OneWeb, SpaceX, and Telesat, and IOT wholesale 
Ligado.
    We do not know what the 5G world will look like. That is 
the nature of innovation. Without evidence that the merger is 
likely to lead to bad outcomes, there is little reason for the 
government to oppose it. It should carefully consider low-
income and wholesale segments where the merging companies have 
a particularly strong presence.
    Thank you for your time. I am happy to answer questions.
    [The statement of Mr. Wallsten follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Cicilline. Thank you, Mr. Wallsten.
    I now recognize Mr. Yoo for five minutes.

                TESTIMONY OF CHRISTOPHER S. YOO

    Mr. Chair, Ranking Member Sensenbrenner, Members of the 
Subcommittee, I am grateful for the opportunity to testify here 
today.
    At the subcommittee's request, my remarks will focus on the 
proposed merger's likely impact on rural consumers.
    The key to my analysis is the growth in the demand for 
wireless broadband and the resulting increase in the need for 
wireless spectrum. Spectrum can be divided into three basic 
types, low band, mid band, and high band, each of which 
operates in a different frequency band and each one serves a 
different role.
    Low band spectrum is typically defined as those bands found 
below one gigahertz. Low band signals propagate very well, 
typically reaching a distance of 18 miles. In addition, low 
band spectrum is more able to penetrate buildings than other 
types of spectrum and does not require direct line of sight.
    Mid band spectrum consists of bands ranging from one to six 
gigahertz. Mid band signals typically cover a range of four 
miles and mid band spectrum typically requires line of sight 
transmission but can penetrate buildings.
    High band spectrum includes frequencies higher than 20 
gigahertz that have long been regarded as unusable but are now 
being unlocked by improvements to technology. The range of high 
band spectrum is quite limited, typically propagating roughly 
half a mile. In addition, high band spectrum requires both line 
of sight and does not penetrate buildings well, although higher 
frequencies do provide more bandwidth.
    The engineering community has long recognized the 
deployment of 5G will depend on a mix of both low-band and mid-
band and high-band macro cells and high-band and mid-band micro 
cells. This is particularly important in rural areas.
    The 14-mile service range and good propagation 
characteristics of low band spectrum make it ideal for 
providing basic coverage for rural areas.
    The problem is that because low bad spectrum covers such 
large areas, the bandwidth that it provides can be quickly 
exhausted. Although these shortages can be addressed by adding 
lower band spectrum, because these additional bandwidth would 
be needed only in population clusters within rural areas, much 
of that additional low band spectrum would be wasted.
    The generally accepted technical solution is to meet the 
growing demand for bandwidth by adding small cells that will 
rely on higher band spectrum in those areas where they are 
needed.
    The four-mile service range of mid band spectrum allows it 
to be targeted efficiently at those areas that need additional 
bandwidth the most. Not only does the addition of these micro 
cells expand the bandwidth available in the population clusters 
within rural areas, using micro cells to satisfy the demand 
generated by those clusters frees up macro cell capacity for 
the most remote customers for whom macro cell service is the 
only viable option.
    The foregoing underscores the reality that successful 
deployment of 5G depends upon having a mix of low band and 
higher band spectrum. Sprint lacks the low band spectrum to be 
able to provide 5G in rural areas as a stand-alone company. 
Sprint holds three to four times less low band spectrum than 
other national wireless providers, as reflected in its weak 
coverage and performance of its current LTE network.
    The lack of low band spectrum leaves Sprint in a 
particularly poor position to serve rural customers as a stand-
alone company. The low population density of rural areas makes 
it unlikely that the limited geographic range of Sprint's mid 
band service will reach enough customers to be financially 
viable.
    The company resulting from the proposed T-Mobile/Sprint 
merger is planning a very different strategy from those being 
pursued by other national wireless providers.
    T-Mobile is already using its 600-megahertz spectrum to 
deploy LTE and if the merger is approved, the merged company 
plans to use the low band spectrum that T-Mobile obtained in 
the recent incentive auction to provide the macro cell 
foundation for its 5G service.
    Because this spectrum is newly deployed, the company will 
be able to convert these macro cells to 5G merely by 
reconfiguring the relevant software, and its mid-band micro 
cells do not need spectrum assignments, while the other 
national wireless providers are following a strategy relying on 
high band spectrum that has not yet been allocated by the 
Federal Communications Commission.
    Sprint's inability to provide service and 5G service in 
rural areas explains why a bipartisan group of 13 House Members 
has signed a letter supporting the transaction and makes the 
presence of respected advocates for rural consumers, such as 
the National Grange and the Attorneys General for New Mexico 
and Utah, supporting the merger significant. I find those 
gestures particularly meaningful.
    I would be happy to answer any questions you have.
    [The statement of Mr. Yoo follows:]

                      STATEMENT OF MR. YOO

    Mr. Chairman and Members of the Subcommittee, I am grateful 
for the opportunity to testify here today. At the 
Subcommittee's request, my remarks will focus on the proposed 
merger's likely impact on rural consumers. The key issue will 
be the impact that spectrum holdings have on the growing demand 
for mobile broadband and the deployment of 5G.

   The Basic Principles of Low-, Mid-, and High-Band Spectrum

    A key input to meeting the growing demand for wireless 
broadband services is spectrum. Spectrum can be divided into 
three basic types--low-, mid-, and high-band--each of which 
operates in different frequency bands and serves a different 
role.
    Low-band spectrum is typically defined as those bands 
falling below 1 GHz. Low-band signals propagate very strongly, 
typically reaching a distance of 18 miles. In addition, low-
band spectrum is less prone to environmental interference and 
is more able to penetrate buildings than other types of 
spectrum and does not require direct line of sight. Because of 
these attractive characteristics, the original cellular 
telephone service was deployed in low-band spectrum. Low-band 
spectrum does have some drawbacks: It does require larger 
antennas and provides less bandwidth than other types of 
spectrum. Its strong propagation characteristics make it less 
useful for adding capacity on a localized basis.
    Mid-band spectrum consists of bands ranging from 1 GHz to 6 
GHz. Base stations operating in the mid-band typically cover a 
radius of four miles. Mid-band spectrum typically requires 
line-of-sight transmission, but can penetrate buildings. It 
does support more bandwidth than low-band spectrum and can 
utilize smaller antennas.
    High-band spectrum is generally regarded as including 
frequencies higher than 20 GHz that had long been regarded as 
unusable, but are not being unlocked by improvements in 
technology. The range of high-band spectrum is quite limited, 
typically propagating roughly half a mile. In addition, high-
band spectrum both requires direct line of sight and does not 
penetrate buildings well. It does provide the highest bandwidth 
and permits the use of the smallest antennas.
    The engineering community has long recognized that the 
deployment of 5G will depend on a mix of both low-band 
macrocells and mid- and high-band microcells.\1\ This is 
particularly important in rural areas. The fourteen-mile 
service range and good propagation characteristics of low-band 
spectrum makes it ideal for supporting basic coverage for rural 
areas.
---------------------------------------------------------------------------
    \1\ See, e.g., Jeffrey G. Andrews et al., What Will 5G Be?, 32 IEEE 
J. on Selected Areas in Comm. 1065, 1066-68 (2014).
---------------------------------------------------------------------------
    The problem is that because low-band spectrum covers such 
large areas and accordingly a relatively large number of users, 
the bandwidth that it can provide can quickly become exhausted. 
Although these shortages can be addressed by adding more low-
band spectrum, the fact that the additional bandwidth would be 
needed by only in population clusters within rural areas, much 
of that additional low-band spectrum would be wasted.
    The generally accepted technical solution is to meet the 
growing demand for bandwidth by adding smaller cells that rely 
on mid-band spectrum. The four-mile service range of mid-band 
spectrum allows it to be targeted efficiently at those areas 
that need the additional bandwidth the most. Not only does the 
addition of these microcells expand the bandwidth available in 
population clusters; diverting the demand generated by those 
clusters to microcells frees up macrocell capacity for the most 
remote customers for whom macrocell service is the only viable 
option.

              Implications for the Proposed Merger

    The foregoing underscores the reality that successful 
deployment of 5G depends on having a mix of low-band and 
higher-band spectrum. This fact underscores two realities.
    The first is that Sprint lacks the low-band spectrum to be 
able to provide 5G in rural areas as a standalone company. As 
the FCC's most recent Wireless Competition Report demonstrated, 
Sprint holds no spectrum in the traditional cellular blocks 
(850 MHz), the spectrum auctioned following the digital 
television transition (700 MHz), or the spectrum distributed in 
the recent incentive auction (600 MHz). Its only low-band 
spectrum is a small sliver of Specialized Mobile Radio (SMR) 
spectrum that is three to four times smaller than the low-band 
holdings of the other national wireless providers.\2\
---------------------------------------------------------------------------
    \2\ Annual Report and Analysis of Competitive Market Conditions 
with Respect to Mobile Wireless, Including Commercial Mobile Services, 
Twentieth Report, 32 FCC Rcd. 8968, 8996-97 (2017) [hereinafter 2017 
Wireless Competition Report].
---------------------------------------------------------------------------
    Sprint's lack of low-band spectrum has manifested itself in 
the mounting indicators of its weak operational performance. 
Information provided to regulators as part of the merger have 
revealed that Sprint's reliance on mid-band spectrum has given 
it a much smaller LTE coverage area than the other national 
wireless providers.\3\ In addition, measures of bandwidth 
performance surveyed by the FCC reveal that Sprint's LTE 
networks consistently deliver significantly lower bandwidth 
than do other national wireless providers.\4\ Although Sprint's 
financial condition is no longer in free fall, its current 
spectrum holdings make it unlikely to be able to address these 
shortcomings should it remain as a standalone company. The lack 
of low-band spectrum leaves Sprint particularly poorly 
positioned to serve rural consumers. The low population density 
of rural areas makes it unlikely that the limited geographic 
range of mid-band service will reach enough customers in order 
to be financially viable.
---------------------------------------------------------------------------
    \3\ Ex Parte Notice on Behalf of Sprint, Applications of T-Mobile 
US, Inc., and Sprint Corporation for Consent to Transfer Control of 
Licenses and Authorizations, att. C, slide 4 (Sept. 25, 2018) (WT 
Docket No. 18-197), https://ecfsapi.fcc.gov/file/10926182275583/
Sprint%20Ex %20Parte%20-%20Doc%20Prod.%20-%2009.26.2018%20FINAL%20-
%20REDACTED.pdf; Chaim Gartenberg, Sprint points out its LTE network 
is, in fact, trash, The Verge (Sept. 28, 2018, 1:11 p.m. EDT), https://
www.theverge.com/2018/9/28/17914230/sprint-lte-network-coverage-bad-
tmobile-merger.
    \4\ 2017 Wireless Competition Report, supra note 2, at 9035-37.
---------------------------------------------------------------------------
    The second is that the company resulting from the proposed 
T-Mobile/Sprint merger is planning a very different strategy 
from that being pursued by the other national providers. The 
company resulting from the proposed merger plans to use the 
low-band 600 MHz spectrum that T-Mobile obtained in the recent 
incentive auction to provide the macrocell foundation for its 
service. Because this spectrum is not currently in use for 
mobile wireless services, the company will be able to deploy 5G 
technologies in its macrocells as well as its microcells 
without any concerns about cannibalizing its existing 
businesses. More rapid deployment of 5G in low-band spectrum 
can only benefit rural consumers. The addition of Sprint's 
underutilized mid-band spectrum would allow the merged company 
to deploy microcells without having to wait for additional 
high-band allocations. The other national wireless providers 
can follow the same strategy, but having largely sat out the 
incentive auction, they would have to repurpose low-band 
spectrum currently devoted to LTE to provide the base-level 
macrocell coverage. Their public announcements indicate that 
they are focusing on future releases of high-band spectrum for 
microcells, which remain uncertain, instead of relying on mid-
band spectrum to support their microcells.

                        Closing Thoughts

    Sprint's limited low-band spectrum holdings leave it poorly 
positioned to provide rural service as a standalone company in 
a 5G world. In addition, the fact that the company resulting 
from the proposed merger appears poised to follow a business 
model that is quite different from the one embraced by the 
other national wireless providers raises strong potential 
benefits for consumers generally and rural consumers in 
particular. That is why a bipartisan group of thirteen House 
Members have signed a letter supporting the transaction.\5\
---------------------------------------------------------------------------
    \5\ Letter from 13 Members of the House of Representatives to Ajit 
Pai, Chainman, Fed. Commc'ns Comm'n, and Makan Delrahim, Assistant 
Attorney General, Antitrust Division, U.S. Dept. of Justice (Jan. 25, 
2019), https://assets.documentcloud.org/documents/5699740/Sprobile 
.pdf.
---------------------------------------------------------------------------
    The Subcommittee should also bear in mind that the nature 
of competition in the telecommunications industry has changed. 
Instead of simply engaging in price competition on facilities 
that already exist, the modern industry now competes by 
focusing on investments in newer, higher quality facilities. 
This replaces the thin price competition based on the resale of 
existing facilities that proved so unsuccessful under the 
Telecommunications Act of 1996 with one that benefits consumers 
by incentivizing investments in improved capacity and services.
    Lastly, policymakers should always remember that market 
developments that improve efficiency, quality, or innovation 
create benefits for consumers while leaving direct competitors 
worse off. That is why antitrust law has long viewed competitor 
complaints with a skeptical eye and emphasized that importance 
of focusing on mergers' impact on consumers, not competitors. 
This makes the presence of respected advocates for rural 
consumers supporting the merger, including Betsy Huber of the 
National Grange (with whom I have the privilege of serving on 
the FCC's Broadband Deployment Advisory Committee) \6\ as well 
as the Attorneys General for New Mexico and Utah \7\ 
particularly meaningful.
---------------------------------------------------------------------------
    \6\ Letter from Betsy E. Huber, President, National Grange, to 
Marlene Dortch, Secretary, Federal Communications Commission, WT Dkt. 
No. 18-197 (Sept. 12, 2018), https://ecfsapi.fcc.gov/file/
109130913822630/T-Mobile-Sprint-Grange%20Letter%20to%20FCC-Final%209-
12-18.pdf.
    \7\ Letter from Hector Balderas, New Mexico Attorney General, and 
Sean Reyes, Utah Attorney General, to Marlene Dortch, Secretary, 
Federal Communications Commission, WT Dkt. No. 18-197 (Aug. 24, 2018), 
https://ecfsapi.fcc.gov/file/1082488029914/2018-08-24%20Joint%20AG% 
20Ltr%20FCC.pdf.

    Mr. Cicilline. Thank you very much, Mr. Yoo.
    Thank you all for your opening statements. We will now 
proceed on the five-minute Rule with questioning, and we will 
begin with the gentleman from Georgia, Mr. Johnson, for five 
minutes.
    Mr. Johnson of Georgia. Thank you, Mr. Chair, and thank the 
panelists for being here today.
    Mr. Legere, the day after the T-Mobile/Sprint merger was 
announced, nine top T-Mobile execs checked into Trump Hotel, is 
that correct?
    Mr. Legere. Thank you, Congressman, for the question. We 
announced our deal on April 29th, and on April 30th, we came to 
Washington, DC, as a leadership team for two things. One is to 
meet the FCC and the DOJ. The second is to announce our 
quarterly earnings, and that was the reason for the large 
group.
    Mr. Johnson of Georgia. I understand there was a purpose in 
coming, but the very next day, nine top execs checked into the 
Trump Hotel after the announcement, correct?
    Mr. Legere. Yes, sir, and very importantly, if I may add, I 
made the decision. I am a long-time Trump Hotel stayer, way 
before this transaction. For example,--
    Mr. Johnson of Georgia. Okay. But the company had not paid 
for more than two nights at Trump Hotel prior to the 
announcement, correct?
    Mr. Legere. Sir, the Trump Hotel is only in existence for 
about a year and, frankly,--
    Mr. Johnson of Georgia. So, yes,--
    Mr. Legere. --we had no reason--
    Mr. Johnson of Georgia. --the bottom line, though, is that 
only two nights had been paid for by T-Mobile prior to the 
announcement, correct?
    Mr. Legere. At the Trump DC but not counting--
    Mr. Johnson of Georgia. Trump DC.
    Mr. Legere. --tons of other hotels.
    Mr. Johnson of Georgia. Trump DC.
    Mr. Legere. Sir,--
    Mr. Johnson of Georgia. Now let me--because I am running 
out of time now. Since the announcement, $195,000 has been 
spent by T-Mobile at Trump Hotel Washington, is that true?
    Mr. Legere. That number is approximately true, and it is 
also--
    Mr. Johnson of Georgia. Let me ask you--
    Mr. Legere. --roughly ten percent of our spend in 
Washington, DC.
    Mr. Johnson of Georgia. Okay. I understand, I understand. 
But now prior--yeah. Do you see how that looks? In other words, 
you don't spend any money at Trump Hotel two nights and then 
after the merger, you spend $195,000 at Trump Hotel?
    Mr. Legere. Sir, that is not on that night and I would 
say--
    Mr. Johnson of Georgia. No, I am saying over the last 11 
months, you have spent 195,000. Do you understand the optics of 
that, what it looks like? It looks like what is happening is 
that T-Mobile is trying to curry favor with the White House.
    Did it occur to you that Members of the public, Members of 
Congress, the FCC, and President Trump himself, did it occur 
that we would all see that expenditure as an attempt by T-
Mobile to gain acceptance by Donald Trump and his 
Administration?
    Mr. Legere. Congressman, I was, and I am a hundred percent 
sure that this deal will be judged by the FCC and the DOJ.
    Mr. Johnson of Georgia. Okay. I am just talking about the 
optics of what happened.
    Mr. Legere. The optics of me staying at the Trump Hotel 
haven't changed for 10 years.
    Mr. Johnson of Georgia. Well, I appreciate that. It kind of 
doesn't pass the smell test with the American public. It looks 
like you are trying to purchase influence. It looks like it 
could be a violation of the Emoluments Clause of the United 
States Constitution.
    Let me ask you this question. Do you know if the Trump 
Organization or the Trump Campaign or the Trump Administration 
has attempted to contact the Justice Department to talk about 
this merger?
    Mr. Legere. Sir, I have no information of that at all.
    Mr. Johnson of Georgia. Do you know, has T-Mobile had any 
discussions with the Trump Organization, the Trump Campaign, or 
the Trump Administration about approving this merger?
    Mr. Legere. I have not, and I am not aware of any 
discussions by my organization.
    Mr. Johnson of Georgia. Mr. Claure, your company contracts 
with broadband providers, isn't that true?
    Mr. Claure. I don't understand your question.
    Mr. Johnson of Georgia. Okay. The Rural Wireless 
Association contracts with Sprint and T-Mobile for the use of 
their towers when rural wireless customers are roaming, is that 
correct?
    Mr. Cicilline. The member's time has expired but the 
witness may answer the question.
    Mr. Claure. That is correct. We provide service to rural 
carriers.
    Mr. Johnson of Georgia. Those contracts will soon be 
expiring with those rural carriers, is that correct?
    Mr. Claure. That is incorrect. Most of the contracts have 
self-renewal and they are in different timelines.
    Mr. Johnson of Georgia. All right. Thank you.
    Mr. Claure. Thank you.
    Mr. Cicilline. The chair now recognizes the Ranking Member, 
Mr. Sensenbrenner, for five minutes.
    Mr. Sensenbrenner. Thank you very much, Mr. Chair.
    Where Mr. Legere and T-Mobile employees stay when they come 
to Washington really has no relationship whatsoever to whether 
this proposed merger is in the public interest or is not, and 
let me say I am kind of embarrassed, sitting here listening to 
the gentleman from Georgia's line of questions, particularly 
since the FCC is an independent agency.
    It is not a part of the Administration, and the 
Commissioners of the FCC are supposed to Act independently 
based upon the data and the information and the testimony that 
is presented to them.
    Now, having said that and I certainly will stand up for the 
independence of the FCC and these other independent agencies. 
Let's get down to whether this merger is in the public interest 
or not.
    So, I want to ask the two CEOs, particularly Mr. Legere. I 
have been on this Committee for as long as I have been in 
Congress, which is 40 years. I have worked on antitrust 
questions, you know, including the mixed-up AT&T divestiture of 
the early '80s, which was supposed to divide things up and 
ended up putting things more back together than they were 
beforehand.
    I conclude European countries tend to put much more 
emphasis on whether a company is too big and stifles 
competition whereas here we focus on what is best for the 
consumer.
    So obviously going to four to three may stifle competition, 
it may not, but that is not what American antitrust law has 
been about. So, anybody that talks about four to three mergers 
and things like that, in Europe it is an entirely different 
law, and we ought to realize that.
    So, I would like Mr. Legere and Mr. Claure to say what can 
consumers expect out of this and you say that prices will 
decrease as coverage, speed, and capacity continue to improve. 
In some ways, it looks like it is mutually exclusive, that you 
get a better product and you pay less for it.
    It seems to me that certain mergers might deal, Number 1, 
with the economics of scale and Number 2, allow each of the 
partners of the merger who will be able to benefit from the 
strengths of the other and get rid of the weaknesses that they 
have.
    So, can our two CEOs answer that in the two minutes I have 
left?
    Mr. Legere. Yes, thank you, sir. The transaction will 
provide a 5G network capability that the United States 
desperately needs. The 40 billion dollars will be invested by 
coming together of these two companies.
    A merger usually is fearful. Airlines are used many times: 
Where airline mergers got us less supply, less leg room, more 
fees, higher prices. But, iIn this case, supply will go up 
dramatically. Prices will go down. Services will expand. In-
home broadband competition will be growing. Rural coverage will 
expand. Rural competition will expand, and jobs will go up.
    So, every piece of what is good for consumers happens in 
this transaction.
    Mr. Sensenbrenner. Can you tell me what all these things 
have to do with where you stay when you come to DC?
    Mr. Legere. They don't, sir.
    Mr. Sensenbrenner. Thank you.
    Mr. Claure. Thank you. So, I think a good way to portray 
this is many times we try to compare this merger to others.
    There has never been a merger in wireless where, by mixing 
two companies, because of our unique spectrum position, that 
you are going to create eight times the capacity. So therefore, 
nobody can stand here and say that we are going to increase 
prices.
    When you have anything that you increase the capacity by 
eight times, we have an economic interest to basically fill 
that capacity and the only way the American consumer will move, 
AT&T and Verizon customers will move is by us lowering prices. 
It is that simple.
    It is not what John or what I say. It is we have an 
economic necessity as part of our business plan to lower 
prices, to fill that capacity, which is going to be eight times 
what we will have if we were to stand alone, and the reason why 
it is that is because our spectrum holdings are able when put 
together to create eight times the capacity.
    Mr. Cicilline. You have three seconds.
    Mr. Sensenbrenner. I yield back.
    Mr. Cicilline. I thank the gentleman for yielding back.
    I now recognize the gentle lady from Washington.
    Ms. Jayapal. Thank you, Mr. Chair, and thank you to our 
panelists for being here today.
    I have been following this proposed merger closely because 
T-Mobile is just outside of my district and many of the workers 
are in my district and I know, Mr. Legere, that you have 
requested a meeting with my office, and we have reached out and 
we hope to do that next week.
    I do want to say to the gentleman from Wisconsin that there 
is actually reason to look at this question of what happened at 
the Trump Hotels because it has been clear from quite a bit of 
reporting that President Trump appears to have involved himself 
in the AT&T/Time-Warner merger and we want to make sure that 
this is not happening today.
    So, I do want to refer to the letter that Senator Warren 
and I sent to you, Mr. Legere, and also to thank you for your 
very prompt response to that letter and so let me just run 
through this quickly and give you a chance to just give me 
quick answers on this because I want to turn to the content of 
the merger after this.
    In 2015, you had a public Twitter dispute with now 
President Trump regarding the quality of Mr. Trump's hotels in 
New York that ended with you tweeting, and this is a quote, ``I 
am so happy to wake up in a hotel where every single item isn't 
labeled Trump and all the books and TV is about him,'' is that 
correct? Just a yes or no.
    Mr. Legere. That is correct.
    Ms. Jayapal. Thank you. Then in August of 2017, though, you 
did stay at Mr. Trump's Washington, DC, hotel, correct?
    Mr. Legere. That is correct, and many times in between, as 
well.
    Ms. Jayapal. Then last April, you announced the merger. It 
was actually just once, according to your letter that you 
responded to me. It was once between then and April when you 
announced the merger with Sprint and you knew that the merger 
couldn't go forward without approval and so you stayed there 
one time, according to this letter you sent me, between August 
and April, is that correct?
    Mr. Legere. Yes, that is true. I had much less reason to be 
coming to Washington. I hope that time returns at some point.
    Ms. Jayapal. Great. Thank you. The very day after the 
merger was announced, you and eight of your top executives were 
on a list of VIP arrivals at the Trump Hotel in DC, correct?
    Mr. Legere. I am not aware of that.
    Ms. Jayapal. Okay. That is per a January 16th Washington 
Post article that has the details of that and so in my letter, 
one of my questions was how much T-Mobile spent at the Trump 
International Hotel and you very kindly gave me that number. 
Can you just please tell the Committee what that number was?
    Mr. Legere. We spent $194,000 out of $1.7 million spent at 
hotels in DC during that period.
    Ms. Jayapal. Understood. I appreciate you have a big 
budget. You have to travel around, and this was relatively 
small in the grand scheme of things. However, were you at all 
concerned that staying at the Trump Hotel so soon after the 
merger was announced and then again according to reporting, you 
hired Corey Lewandowski to consult with you, is that correct?
    Mr. Legere. Can I answer both of those questions?
    Ms. Jayapal. You can answer both of those questions.
    Mr. Legere. Every consultant that we hire is completely 
disclosed, and we had hired Turnberry, an organization that he 
has been affiliated with or not affiliated with, but we have 
not hired Corey Lewandowski directly.
    The decision to stay at the Trump Hotel again was my 
decision, and it was consistent with where I have stayed and 
how I chose hotels in the past.
    Ms. Jayapal. Except that in 2015, you said you were never 
going to stay there and so, we are relying on what you have 
said and so I only raise this because we unfortunately have a 
situation where the President has not disclosed his business 
interests and when he has a business interest, and it appears 
that you might be trying to influence the President to get 
involved in something he really should not be involved in, that 
causes concern for this committee, which is the Judiciary 
Committee, and so I would just say to you that if you do want 
this to be judged on the merits of the merger, which I think 
you want, we would expect that there would be concern around 
anything that might shed a light of impropriety on the merits 
of the merger.
    So, now let me turn to the merger itself. There are 
currently four big companies in the telecommunications space. 
Verizon has 34 percent of the market, AT&T has 33 percent, T-
Mobile has 18 percent, and Sprint has 14 percent.
    Mr. Legere, and I think both of you testified that critics 
who say that prices will go up and that jobs will be lost are 
wrong and so let me turn to you, Ms. Sohn.
    You used to work for the FCC. You are an expert on 
antitrust policy, and I would like to ask you, is it your 
opinion that moving from four companies to three will make the 
telecommunications market more competitive?
    Ms. Sohn. No, it will make it less competitive, and it will 
raise prices on consumers, as the FCC's record shows. Mr. 
Legere makes a lot of promises but, as the Senate says, nine 
Senators said in an 18-page single-spaced letter, a dynamic CEO 
is not a legal commitment.
    Mr. Legere. Congresswoman, that is just false.
    Ms. Jayapal. I am sorry, Mr. Legere. It is my time.
    Mr. Legere. That is just false.
    Ms. Jayapal. It is my time. I just wanted to end my 
testimony by saying that both the Netherlands and Austria 
underwent four to three mergers in the mobile wireless space. 
Both saw price increases.
    Mr. Chair, I ask for unanimous consent to enter into the 
record both my letter with Senator Warren to Mr. Legere and his 
response back to us.
    Mr. Cicilline. Without objection.
    Ms. Jayapal. Thank you.
    [The information follows:]
    

                       MS. JAYAPAL FOR THE RECORD

=======================================================================

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    Mr. Cicilline. The chair now recognizes the gentleman from 
Florida, Mr. Gaetz, for five minutes.
    Mr. Gaetz. Thank you, Mr. Chair.
    I just cannot believe what we are watching. The gentle lady 
from Washington just talked about how the substance of this 
merger is critically important to her constituents because it 
is so nearby and then only reserved the remaining 50 seconds of 
her time to ask questions about the substance of the merger 
because we must go into what kind of hotel towels you like. I 
guess I should confess I once said I would never stay in a La 
Quinta again, and I have stayed in La Quintas subsequently. So 
presumably that is of some relevance.
    I would like to spend the lion's share of the time on the 
actual substance. A Huawei employee entered T-Mobile, into a 
testing lab, put a proprietary robot arm into a laptop bag and 
then walked out.
    With this in mind, Mr. Legere, does T-Mobile currently have 
any Chinese equipment in its existing network? Do you plan to 
use Huawei in the new T-Mobile 5G network, and what is T-Mobile 
itself doing to secure its network?
    Mr. Legere. Yes, thank you for the question, sir. T-Mobile 
has no Huawei or ZTE in the core of its network. We have no 
Huawei or ZTE plans. They will not be in our network now or 
ever.
    There was a robotic arm that was stolen in a lawsuit that 
we filed with Huawei, and we are very pleased by the things 
that the government is doing to ensure the safety around 
Huawei.
    Mr. Gaetz. Ms. Bennet, do your Members contain Huawei or 
ZTE equipment?
    Ms. Bennet. Yes, we have about 25 percent of our Members 
that have those two Chinese vendors in their networks. They did 
it because they had universal service funds to spend. They were 
trying to look for a low-cost economical way to spend their 
money and they did deploy those back in 2010-2011, before it 
became known that it was a problem, and our Members--
    Mr. Gaetz. So, for the sake of cost, your Members do have 
Huawei and ZTE parts. Does Huawei sit on your board?
    Ms. Bennet. We do have a member, a Huawei representative on 
our board in a non-voting capacity and has no influence over 
our Public Policy Committee or our board.
    Mr. Gaetz. It has come to my attention that some of your 
member companies also use Huawei equipment and have sites or 
towers in close proximity to military bases, is that correct?
    Ms. Bennet. I believe that that is correct, yes.
    Mr. Gaetz. So, as we move to 5G, what plans do your member 
companies have to remove Huawei equipment and how quickly do 
you plan to address the national security concerns that these 
questions raise going forward?
    Ms. Bennet. It is a very good question and thank you. We 
plan to do what the Federal Government says that we should do. 
To the extent that that equipment needs to be replaced, we plan 
to replace it. Of course, we are going to need funding to do 
that, and we have been in discussions with both Members of 
Congress, the FCC, and the Administration on how to go about 
that without harming the rural Americans that live in that area 
by having them have no access to public safety services by 
putting the equipment out of order.
    Mr. Gaetz. Mr. Legere, will T-Mobile be requesting any 
additional government assistance to accommodate your plans to 
not use the lower cost Huawei and ZTE equipment?
    Mr. Legere. No, sir, we wouldn't, and frankly, I think we 
have even offered to play a role with the Rural Wireless 
Association to help them possibly use some of our pricing power 
to purchase alternative equipment.
    Mr. Gaetz. So, as I understand it, some of the rural 
providers oppose the merger. If the merger were to take place, 
there would be more connectivity that would come not from their 
providers but from T-Mobile in that circumstance and that would 
result in not having as much ZTE and Huawei equipment utilized 
in our technology transfers of information and you wouldn't 
require any additional government assistance, like the rural 
carriers have just said they would require?
    Mr. Legere. Right. The existence of it in their networks 
concerns us.
    Mr. Gaetz. Mr. Chair, I seek unanimous consent to enter 
into the record a CNN article, March 11th, 2019, entitled 
Huawei Connects Rural America: Could It Threaten the Country's 
Most Sensitive Military Sites?''
    Mr. Cicilline. Without objection.
    [The information follows:]
    

                        MR. GAETZ FOR THE RECORD

=======================================================================

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    Mr. Gaetz. I want to also ask about emergency response. I 
come from North Florida. We have been dealing with the 
aftermath of Hurricane Michael, and I have seen in trips that 
we have taken, bipartisan trips, where cities that have 5G 
technology have amazing capabilities in the event of disasters, 
especially for vulnerable populations, like people in hospitals 
and nursing homes.
    Can you speak specifically to how 5G will help our local 
communities respond to disasters?
    Mr. Legere. Yes, Congressman, that is a very, very 
important question. Resiliency is a combination of backhaul 
power, tower design, and restoration capability, and we have 
significantly invested in those areas to now, and that is a 
core part of the deployment of the New T-Mobile 5G Network.
    In fact, in Hurricane Michael, the restoration capability 
and the power investments we made allowed us to virtually have 
our entire network up throughout the disaster. That is a core 
principle of the design of the New T-Mobile network.
    Mr. Gaetz. What would be an example of how 5G could save 
lives in a disaster?
    Mr. Legere. The 5G network, most importantly, the reach and 
the breadth, and the coverage will provide capabilities that 
are far more resilient and far more pervasive than their 
coverage.
    Mr. Gaetz. Thank you, Mr. Chair. Yield back.
    Mr. Cicilline. Thank you.
    The chair now recognizes the gentleman from Maryland, Mr. 
Raskin, for five minutes.
    Mr. Raskin. Mr. Chair, thank you very much.
    I am going to start with you, Ms. Sohn. Mr. Legere said 
that 16 of 19 State agencies reviewing the merger have already 
approved the transaction, but I know there are still ongoing 
State AG investigations.
    Are those 16 agencies that Mr. Legere cited as having 
approved the merger, are they responsible for determining if 
the merger violates antitrust laws related to the question 
before the FTC and the Justice Department?
    Ms. Sohn. Yeah. When the PUCs, the Public Utilities 
Commissions, and the State Public Service Commission's review 
this merger, they are not actually looking at the mobile 
wireless market. That is not in their jurisdiction.
    Mr. Raskin. What are they looking at?
    Ms. Sohn. They are looking at wire line, the small amount 
of wire line capacity that is involved in this merger.
    Mr. Raskin. Under State antitrust principles?
    Ms. Sohn. That is correct, but they do not look at what is 
the main event in this merger, which is the mobile wireless 
market. So, with all due respect to State PUCs and PSCs, the 
review is kind of irrelevant.
    Mr. Raskin. Okay. Ms. Bennet, let me ask you. You are my 
constituent, I think. You live in Carroll County?
    Ms. Bennet. That is correct.
    Mr. Raskin. Which is the most rural part of my district and 
a beautiful part of my district, and you are here on behalf of 
the Rural Wireless Association, representing 50 or more 
wireless carriers, right?
    Would this merger lower prices or increase prices and why 
and what would the impact be in the rural areas, such as where 
you live?
    Ms. Bennet. From a rural American's perspective, it will 
increase prices and the reason is because of the roaming 
agreements. Each carrier has in a rural market, we only serve 
the very small areas that are little islands in rural America. 
When rural Americans leave those areas to go travel to cities, 
they have to use a bigger carrier's network.
    In the case of Sprint, my Members have reported that their 
roaming arrangements with Sprint are often 20 times lower than 
those with T-Mobile. So, the fear is that if the merger takes 
place and the agreements that are in a place right now that 
some of them, contrary to what Mr. Claure said earlier, they 
are starting to expire, they don't automatically renew, and T-
Mobile has not indicated that they will renew those agreements. 
They have said that we can select those agreements but if they 
are going to expire in a couple months, we are very concerned 
about that.
    The pricing would go up--
    Mr. Legere. Sir, for the record,--
    Ms. Bennet. Please let me finish. The pricing would go up 
for those rural consumers. So, we are going to have a situation 
we fear where rural consumers will have really good service at 
home with their local carrier and use the phone there for that 
service, but when they travel, they will have to purchase 
another phone which means rural consumers will end up paying 
double, one for their local home service and one for their 
travel service, so two phones to carry around.
    Mr. Raskin. Thanks. Mr. Legere, can you respond to that?
    Mr. Legere. Yeah. Just for the record, several times now 
people are referring to what is going to happen to my prices. I 
am going to be the CEO of the New T-Mobile. I have already 
taken a business plan to the rating agencies and the financial 
markets. Prices are going down. It is in my business plan. It 
is also promised in the commitments that I made to the FCC.
    From a roaming standpoint, we have made it very clear that 
we will honor the agreements that both Sprint and T-Mobile 
have. Remember, 70 percent of all the roaming agreements T-
Mobile has are reciprocal and we are a $25 million net payer.
    Anybody that wants a roaming agreement that is reciprocal 
at zero, we will sign that right now. Whether the rural 
carriers pass those prices on to their customers, that is a 
different story. But, Ninety-six percent of rural America will 
be covered by the New T-Mobile network, which is significant, 
contrary to the point that Mr. Shelton made.
    Mr. Raskin. Mr. Shelton also testified that the transaction 
would result in lower wages and thousands or tens of thousands 
of layoffs, perhaps hundreds of millions of dollars lost to CWA 
workers.
    Are you willing to make the same promises to the workers 
that you are making to the customers? When you say prices are 
going to go down, are you promising that those workers are not 
going to lose their jobs, or do you concede that they will?
    Mr. Legere. Thank you, sir. I mean, I would just have to 
categorize everything Mr. Shelton said as bad assumptions, bad 
math. The last time we were here in a hearing, Mr. Shelton said 
wages would go down but when asked what the wages were at T-
Mobile and Sprint, he said, ``I don't know. We don't have an 
agreement with them.'' So, he has no--
    Mr. Raskin. Can you just explain?
    Mr. Legere. Wages did not go down.
    Mr. Raskin. Can you explain as a matter of economic theory 
that if you have the two businesses across the street from each 
other and you take over the other business, why doesn't it 
logically follow that half of the people are going to lose 
their jobs?
    Mr. Legere. If there is a Sprint and a T-Mobile store in 
close proximity to each other, even if we take one of the 
geographies and close the real estate, it is highly likely that 
we will need both sets of employees because of our foot traffic 
and share of gross ad requirements.
    The other thing I would tell you is that we are offering a 
job to every T-Mobile and Sprint employee. We also have at 
Sprint retail stores, a 60 percent attrition rate annually and 
a 19 percent attrition rate at T-Mobile. So, this is something 
that we can take into consideration--
    Mr. Raskin. Thank you.
    Mr. Legere. --and handle without--
    Ms. Raskin. Mr. Chair, could I give Mr. Shelton just a 
chance to respond, just in fairness to him?
    Mr. Cicilline. Your time has expired, but if Mr. Shelton 
wants to answer the question.
    Mr. Shelton. As far as promising employees a job, there are 
so many loopholes there, it is amazing, but when you look at 
what those stores are actually, 84 percent of them are 
authorized dealers who are not employees of T-Mobile and have 
no promise even from Mr. Legere that will not be kept with 
authorized dealers because they are not T-Mobile employees. 
That is some 88,000 people in the United States.
    Mr. Legere. With all due respect, sir, when Metro-PCS was 
acquired, Mr. Shelton said we would decline 10,000 jobs. I 
added 23,000 jobs, and in my tenure as CEO, I have added 75,000 
jobs, in addition to the 16,000 from Metro-PCS. So, my track 
record speaks for itself.
    Mr. Cicilline. Thank you.
    The Chair now recognizes Mr. Buck--
    Mr. Buck. Before my--
    Mr. Cicilline. --and I'll actually give you an extra 
minute, if you need to, since the witness on this side took an 
extra minute.
    Mr. Buck. Actually, I just wanted a ruling from the chair, 
if I may. I had dinner at the Trump Hotel three weeks ago. My 
steak wasn't cooked properly, and I sent it back and it was 
then returned cooked really well and I am just wondering if I 
have a conflict of interest.
    Mr. Cicilline. I think only if you are involved in a merger 
of two large companies.
    Mr. Buck. Okay.
    Mr. Cicilline. If you are not, I think you are safe.
    Mr. Nadler. Wait a minute, Mr. Chair.
    Mr. Cicilline. Yes.
    Mr. Nadler. That means he cannot speak at this hearing.
    Mr. Cicilline. Yes, that is true. I think they are trying 
to say perhaps you shouldn't speak during the hearing. No.
    [Laughter.]
    Mr. Cicilline. Mr. Buck is recognized.
    Mr. Buck. Thank you very much. I appreciate that.
    First, Mr. Chair, I would like to introduce a letter for 
the record from a constituent of mine, Frank DiRico, who is the 
CEO of Viareo Wireless and writes about the effect of this 
merger on rural broadband and he is very excited about this 
merger and continuing to work with T-Mobile. Mr. Chair, is 
there any objection to entering this?
    Mr. Cicilline. Without objection.
    [The information follows:]
   

                        MR. BUCK FOR THE RECORD

=======================================================================

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    Mr. Buck. Thank you.
    Then I wanted to just comment, Ms. Sohn, that between the 
two of you, I am going with T-Mobile just because he has better 
shoes. I don't know if you have seen them but those--
    Mr. Cicilline. He is counting on that.
    Ms. Sohn. I have better glasses, though.
    [Laughter.]
    Mr. Buck. They are cool glasses, I give you. If they were a 
little pinker. I wanted to ask the two gentlemen from T-Mobile 
and Sprint whether you are planning on buying more spectrum as 
a result of this merger.
    Mr. Legere. The answer is yes. Currently, we are 
participating in a millimeter wave spectrum auction as we speak 
and there will be a lot more spectrum that is needed, in 
addition to what we are going to get together with these two 
coming together, these two companies.
    Mr. Buck. Do you plan on buying that from current holders 
of spectrum or in the market, other areas of the marketplace?
    Mr. Legere. Yeah. The significant amount of the spectrum 
that we need to run this new company will come from the 
integration of the low-band, mid-band, and high-band spectrum 
portfolios that we have. There will continually, as 5G 
advances, be a need to buy and there are government auctions 
that we are involved in.
    Mr. Buck. You have made promises about pricing and I am 
wondering, based on those promises, do you believe that there 
is any role for any government agency in the pricing that you 
will be setting?
    Mr. Legere. I believe my commitments are enforceable, and I 
have made it clear. Two things: I have a business plan that has 
prices declining. I have supply going up significantly. I have 
an 87 percent reduction in the unit cost of a gigabit of data 
that is being sold. So, I have huge supply. I have a 
significant price decline capability, and I committed that to 
the FCC in writing for the first three years.
    Mr. Buck. Okay. So, I took an economics class in college 
and I immediately went into law.
    [Laughter.]
    Mr. Buck. I wanted to just ask you to explain to the 
American public why three big companies makes for better 
competition in the marketplace than two big companies and two 
small companies.
    Mr. Legere. Right. Thank you, sir. I think you categorized 
that well. Amongst the ways that I look at this merger is going 
from two to three and, by the way, after the Number 3 and 
Number 4 players come together, we will still be a much smaller 
Number 3 to the economic power of AT&T and Verizon. Why this 
makes sense is that we will be able to significantly increase 
supply and bring competition greatly to those other two.
    The last thing I would also say, we continue to ignore that 
the cable monopolists are in wireless. Comcast added more phone 
customers in the last year than AT&T and Verizon together. 
Comcast, Charter, now Altice. DISH owns a massive amount of 
spectrum that will come in, and Tracfone happens to be largest 
prepaid player in the market.
    So, there are more than just the three players but going 
from two to three makes more sense than just having two.
    Mr. Buck. Do you agree with that?
    Mr. Claure. One hundred percent. We talk about the U.S. 
market being a competitive market. It is not. AT&T and Verizon 
today have over 70 percent market share, but what is worse is 
they control over 93 percent of the cash flow in this industry.
    So, think about it. How could you compete when you are 
competing against two companies that are generating 93 cents of 
every dollar of profit? So, the only way we are going to be 
able to compete is when we put our two companies together, we 
build a better product, we lower our prices, we cover every 
corner in America, and this is the first time that AT&T, 
Verizon, Comcast, and Charter are really going to feel the 
competition.
    So, we are going to make this market more competitive, and 
this merger is pro-consumer because everybody benefits, whether 
you are postpaid customer or whether you are prepaid customer. 
Better product at lower prices, that is the basics of business.
    Mr. Buck. So, have the two of you put your head together 
and figured out which color this new entity will go with?
    Mr. Legere. That would be magenta.
    Mr. Buck. I yield back. Thank you.
    Mr. Cicilline. Thank you.
    The chair recognizes the Chair of the Full Committee, Mr. 
Nadler, for five minutes.
    Mr. Nadler. Thank you. Before I start my questions, Ms. 
Sohn, you look very eager to respond to the last question. So, 
could you take just a moment to do that?
    Ms. Sohn. I am very eager. So, Mr. Legere keeps talking 
about unit price and I think that is really important because 
what he is saying is the New T-Mobile will give you more. He is 
not saying what they are not going to do, but on a per unit 
price, you will either pay the same or less. So, you will get 
faster speeds, better quality, but in absolute terms, you are 
going to pay more, but on a per unit, that is the words you 
just used. Okay.
    Number 2, if I hear excess capacity, excess capacity one 
more time, I think my head is going to explode. Okay. That is 
seldom the primary, the only determinant of a pricing decision. 
A market-dominating entity can reduce output because it is more 
profitable to do so.
    Carnegie owned all the railroads. He had lots of capacity, 
but he was still a monopolist. So, the capacity is meaningless 
when it comes to setting prices.
    Mr. Nadler. Thank you. Okay. Now the questions that I have 
for Mr. Shelton.
    Economic concentration in every sector of the economy 
almost has reached historic levels. Last week, Professor John 
Kwoka of Northeastern testified in front of the Senate that 
concentration has been steadily rising and competition 
declining in a great many sectors of the economy, raising 
``legitimate concerns about increasing market power in large 
swaths of the U.S. economy.''
    What effect has decades of consolidation, rising employer 
market power, and declining organization rates had on workers?
    Mr. Cicilline. Please use your microphone, Mr. Shelton.
    Mr. Shelton. Obviously, it has put a downward spiral on 
wages. The loss of unions has put probably a bigger downward 
spiral on--
    Mr. Nadler. The loss of unions aside, you think the 
concentration has put a downward spiral?
    Mr. Shelton. Right. It has increased competition for labor 
and when you increase competition for labor, the labor prices 
go down and that is what--
    Mr. Nadler. You mean decreased competition for labor?
    Mr. Shelton. Increased. I am sorry. Did I say decreased? 
Increased.
    Mr. Nadler. It has increased competition for labor?
    Mr. Shelton. No, decreased. I am sorry.
    Mr. Nadler. Okay. Then the prices go down is what you are 
saying?
    Mr. Shelton. Right.
    Mr. Nadler. As you note in your written, you discuss both 
T-Mobile's and Sprint's ``long history of ignoring workers' 
rights in violating federal labor laws,'' noting that T-Mobile 
in particular has been the subject of more unfair labor 
practice charges per employee than any other big business in 
the United States. That is a quote from you.
    How could the Sprint and T-Mobile merger affect New T-
Mobile's ability to engage in unfair labor practices?
    Mr. Shelton. They will become much more powerful. This is a 
company that has been found guilty by various and sundry courts 
and the NLRB on already doing unfair labor practices and if you 
put them together, they will be more powerful and they will do 
everything they can to try to take unions out and they will 
continue to.
    Mr. Nadler. They will have more power, and if you put them 
together, albeit they are more powerful, they would not have 
less desire to do so?
    Mr. Shelton. I don't think they would have more desire 
because they want to keep unions out. The only way that their 
employees have a voice is through collective bargaining and 
they don't want any part of collective bargaining.
    Mr. Nadler. That wouldn't change?
    Mr. Shelton. No.
    Mr. Legere. Mr. Chair, could I comment?
    Mr. Nadler. I have one more question for someone else. Then 
if we have time.
    Ms. Scurato, in your testimony, you note that the proposed 
Sprint/T-Mobile merger would disproportionately cause harm to 
low-income communities and people of color. What are the harms 
that low-income communities and people of color are likely to 
experience as a result of the Sprint/T-Mobile merger and why do 
you think that they would experience those harms?
    Ms. Scurato. Thank you for the question. They are going to 
experience higher prices. If you look at the FCC record and 
these companies' economic studies, they actually show that 
prices are going to increase, and I am going to quote here--
    Mr. Nadler. They show the prices are going to increase 
because of consolidation?
    Ms. Scurato. Yes, absolutely, and actually DISH economics 
have concluded that T-Mobile and Sprint's own economists 
predict significant price increases, the harms of which are 
going to disproportionately fall on lower-income subscribers.
    Mr. Nadler. Who did you say predicted that?
    Ms. Scurato. Yes, their own economists, and this is--
    Mr. Nadler. T-Mobile's economists?
    Ms. Scurato. Absolutely.
    Mr. Legere. DISH, one of the objectors.
    Mr. Nadler. Okay. DISH's economists?
    Ms. Scurato. DISH's economists concluded that Sprint and T-
Mobile's own economists predicted that, and that is what is in 
the FCC's record.
    Mr. Nadler. Okay. Thank you.
    Mr. Claure. Let me just intercede once. I am Mr. Claure.
    Mr. Nadler. Who wanted time to reply? Mr. Legere asked for 
time to reply, too.
    Mr. Legere. I cede to Marcelo.
    Mr. Cicilline. He is ceding his authority. Okay.
    Mr. Claure. So--
    Mr. Nadler. Would you reply to both those questions, what 
you wanted to reply to and what Mr. Legere wanted to reply to?
    Mr. Claure. We cannot understand why when we are here under 
oath and somebody says that we have said we are going to get 
higher prices--
    Mr. Nadler. No, I think she said that--she quoted DISH's 
economists as quoting your economists.
    Mr. Claure. Correct. So, let's make sure that we are very 
clear. We have made a commitment that we are going to lower 
prices. We went above and beyond. In other mergers, people go 
and make a filing with the FCC. We did that voluntarily. Nobody 
asked us to do that. We are making a commitment because we have 
eight times the capacity, which is something substantial.
    Just remember one thing. We are going to lower the price or 
the cost of our product by 87 percent of the manufacturing cost 
of a gig. Of course, we are going to lower prices. If any 
industry in the world where you lower the cost, you lower your 
cost by 87 percent, therefore, we have excess capacity and we 
made a commitment to have lower prices.
    Mr. Cicilline. Okay. Thank you.
    Mr. Nadler. Thank you. My time has expired.
    Mr. Gaetz. Mr. Chair?
    Mr. Cicilline. Yes, I recognize the gentleman from Florida 
for unanimous consent request.
    Mr. Gaetz. Thank you, Mr. Chair. Seek unanimous consent to 
enter into the record a letter from Northeast Colorado 
Cellular, Inc., directed to you and Mr. Sensenbrenner.
    Mr. Cicilline. Without objection.
    [The information follows:]

                        MR. GAETZ FOR THE RECORD

=======================================================================

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    Mr. Cicilline. I now recognize the gentle lady from 
Florida, Ms. Demings, for five minutes.
    Mrs. Demings. Thank you so much, Mr. Chair. Thank you to 
all our witnesses for being here with you.
    As I sit here and listen to all my colleagues, I guess it 
is necessary for some to try to find humor when we are talking 
about American workers potentially losing their jobs and people 
of color once again potentially being taken advantage of and 
persons who live in rural communities potentially losing 
adequate coverage.
    For some reason, I am struggling to find the humor in that 
and with all due respect to my colleagues who feel like where 
you stay is irrelevant, I do associate myself back to the 
comments originally made by my colleague from Georgia because 
when we are talking about mergers that cost millions of 
dollars, billions of dollars, excuse me, I do believe a 
compromise or the appearance of compromise or undue influence 
is relevant to this conversation.
    Mr. Legere, I am going to start with you. In your 
testimony, you said that this proposed merger would, and we 
referred to this quite a bit, lead to lower costs, it would be 
a tremendous job creator and would create thousands of more 
jobs.
    So, under those circumstances, when I hear what you say and 
what I hear what Mr. Shelton says, it appears to me that that 
would be a marriage made in heaven but apparently obviously the 
workers do not feel that way.
    So, if you would just please, if you have already done it, 
do it again for me because I don't see it quite yet and I am 
really struggling to see it, how does the merger actually lower 
costs? How does it become a tremendous job creator, and how 
will you create thousands of jobs that should make American 
workers, and the unions that represent them, extremely happy 
but they're not?
    Mr. Legere. Thank you very much, Congresswoman. I am sure 
the topics that you outlined, that you said we're finding humor 
in, I find no humor. We are the largest provider to people of 
color in low-income and will be, and they will be top 
beneficiaries of this transaction. Rural America will be, as 
well.
    Jobs, we are going to create 5,000 new retail jobs. We are 
going to onshore 5,600 customer care jobs. We are going to have 
1,800 network integration jobs, and we are going to have 11,000 
new positions. We will have 3,600 more employees in the first 
year than the two separate companies combined and 11,000 by 
2024. So, jobs are going up.
    Again, Mr. Shelton's track record is when AT&T tried to buy 
T-Mobile, he predicted it would increase jobs 96,000. When T-
Mobile bought Metro-PCS, he said it would decrease 10,000. I 
would submit that those are related to whether he has a union 
agreement, and he would be very happy in this job creation if, 
in fact, we were a union-created organization. Jobs will go up 
every single day of this new company.
    Mrs. Demings. Mr. Shelton, would you respond to that, 
please?
    Mr. Shelton. Yes. Mr. Legere is talking about jobs going up 
5,500 or 5,000 call center jobs. Right now, T-Mobile ships call 
center jobs overseas every moment of every day. There is a tape 
wandering around the internet where his vice President of 
something is telling the people in the Philippines that work 
for T-Mobile in call centers that they are doing a great job 
because a year ago, there was none of them and now there is a 
thousand of them.
    Mrs. Demings. Mr. Legere, is the merger an American job 
creator or an American job destroyer?
    Mr. Legere. It is a significant American job creator, and I 
would just say to Mr. Shelton, I do have some offshore jobs, 
and I will have some--
    Mrs. Demings. Do you ship American jobs overseas every day 
as he indicated?
    Mr. Legere. That is absolutely not true. Jobs in America 
are going up significantly every day in the New T-Mobile.
    Mr. Shelton. If I may, when you consider that 84 percent of 
the stores that are operated by authorized dealers, not 
employees of T-Mobile but authorized dealers, and then you 
consider that after this merger, if this merger goes through, 
T-Mobile/Sprint will have twice the number of stores that 
either AT&T or Verizon has, what do you think is going to 
happen to those stores?
    Mrs. Demings. I know exactly what I think. Thank you. Ms. 
Sohn, would you please go ahead with the last few seconds?
    Ms. Sohn. Thank you so much. I just want to list the 
promises I have heard today.
    On wholesale access, prices, Lifeline, in-home broadband, 
and jobs, like every day there is a new promise, but my 
question is who is going to enforce these vague promises? I 
agree with the Assistant Attorney General Makan Delrahim that 
behavioral remedies don't work. They didn't work in the 
Comcast/NBC merger. They didn't work in other mergers. Who is 
going to enforce all these promises? That is the problem. 
Nobody is the answer, and nobody is equipped.
    Mrs. Demings. Thank you so much, Mr. Chair. I yield back.
    Mr. Cicilline. Thank you.
    The chair now recognizes the gentleman from North Dakota, 
Mr. Armstrong, for five minutes.
    Mr. Armstrong. Thank you, Mr. Chair.
    Mr. Legere, we talk a lot about the race to 5G and we have 
talked about it today and we all recognize that when we are 
competing in this, we are competing with China and there is no 
real private business in China and they have a sense and a 
unity of purpose as a country in these types of scenarios that 
we don't.
    My question is, what does it mean for the U.S. to win the 
race to 5G? I mean, we are talking about short-term in jobs and 
those types of things but a longer view of economics of what 
this means and that is before we get into national security 
questions.
    Mr. Legere. Thank you very much, sir. The statistics from 
CTIA suggest that there are three million American jobs at 
stake with 5G leadership. That being that if we don't retain 
and take leadership in 5G, as we did with 4G, we can lose those 
jobs. It would be $350 billion of investment and a half a 
trillion of economic impact.
    Right now, the U.S. is behind China and South Korea in the 
deployment of 5G, as you say, heavily because the country of 
China has a massive state-run budget to deploy 5G as a critical 
national priority. With what we are going to do with the New T-
Mobile--the $40 billion worth of investment, the creation of 
the new network, and forcing AT&T and Verizon to not just have 
short-term focus on millimeter wave and small geographies--
together we can lead the country to 5G and attain that critical 
position.
    Mr. Armstrong. When we get into this technology, I think it 
is important to recognize, too, we will pay $800 for a phone 
but not if there is one available for $740. I mean that is the 
nature of the American consumer.
    So when we start talking about where these processes are 
made and those types of things, but basic economics tells us 
more capacity should relate to lower prices, but the 5G dates 
are 2021, 2024, and those dates--I mean for everybody, those 
dates seem like a long way off, but can we expect to see 
improvements in speed and performance and I suppose most 
critically capacity before then?
    Mr. Legere. Yes, the New T-Mobile's network is going to 
have median speeds by 2024, 450 Mbps. By 2021, it will be a 150 
Mbps median speeds across the whole country, and as I said, we 
are aspiring to cover 96 percent of all rural America.
    The promise of 5G, by the way, is a hundred times the speed 
and a hundred times the number of devices and 10 times better 
latency. So, it is a major transformational step but even as we 
migrate to it, the New T-Mobile speeds are going to be 15 times 
faster.
    Mr. Armstrong. In my never-ending quest to educate people 
about North Dakota, we have the best rural broadband in the 
entire country and when you deal with the success story for 
that, North Dakota is it, but we do recognize that rural 
America is significantly underserved across the entire country.
    So, I guess my question for Mr. Claure would be, do you 
think Sprint can no longer continue viably as a nationwide 
competitor, especially as we transition to 5G, under the 
current structure?
    Mr. Claure. There will be a different Sprint. For Sprint to 
be able to offer 5G in our current coverage, which is about 
half of AT&T's and Verizon's coverage, we will have to spend 
close to $25 billion.
    As you know, Sprint already has $40 billion in debt and we 
don't make any money. We barely break even. We will basically 
have to borrow that money from the bank and potentially must 
increase prices and we would only be to offer 5G in selected 
areas. The promise of 5G needs to be coverage end to end, so we 
can enable the new technology that would come with 5G. So, 
Sprint will be a very different company.
    Now, why this is extremely relevant is today, AT&T and 
Verizon, again like I said before, they have 93 percent of the 
profit generated and 70 percent of the market. If you shrink 
Sprint to be a smaller company, then basically the market share 
of AT&T and Verizon will grow more and the market dominance or 
the market abuse that they have will eventually grow.
    So, the way to make this market more competitive is by 
allowing Sprint and T-Mobile to merge, to create one third 
viable competitor that will bring competition to America.
    Mr. Armstrong. Thank you, and I think you and I can 
probably have a longer conversation than 20 seconds will allow 
about what happens, what potential pitfalls exists if Sprint 
does shrink and raise prices and how that looks to your current 
economic outlook. The type of company you are now versus the 
type of company you'd foresee in four years.
    Mr. Claure. It will be a smaller company, as I said, and, 
more importantly, it will make the other two much, much 
stronger. As we talk about market dominance, they will actually 
become a lot more dominant if that would be the case.
    Mr. Armstrong. Thank you.
    Mr. Cicilline. Thank the gentleman.
    I now recognize the gentle lady from Pennsylvania, Ms. 
Scanlon, for five minutes.
    Ms. Scanlon. Thank you. So, the major purpose of our 
antitrust laws is to address the impact of corporate 
consolidation on the public. So, I wanted to try to focus my 
time on the impact of the proposed merger on the consumers and 
workers in my district, which is Pennsylvania 5. It is South 
Philadelphia, all of Delaware County and part of Montgomery 
County, Pennsylvania.
    So, Ms. Scurato, and I note that you are a Villanova Law 
grad, which is in my district, your testimony that you 
submitted talks about the harm to price-conscious customers in 
low-income communities and communities of color. Would that 
also include seniors?
    Ms. Scurato. Yes, to the extent that they are price-
conscious customers, it would include seniors.
    Ms. Scanlon. Okay. You talk about--I am sorry. Losing my 
place here. You have got a chart on Page 11 of your testimony 
that looks at major markets and the percentage of market held 
by Sprint and T-Mobile.
    Can you explain the significance of that chart with respect 
to the Philadelphia region?
    Ms. Scurato. Sure, absolutely. So, this is a percent of the 
market that Sprint and T-Mobile owned as a company or they own 
as a wholesale partner. It actually shows what percentage of 
the market they actually have in that district, in 
Philadelphia.
    Ms. Scanlon. What is the impact of a merger on the 
Philadelphia region if they have, what did you say, 40-46 
percent of the market?
    Ms. Scurato. So, the impact is that the price-conscious 
customer doesn't have that robust competition between Sprint 
and T-Mobile in order to keep prices low.
    Ms. Scanlon. Is this what you would describe as a highly-
concentrated market?
    Ms. Scurato. Absolutely.
    Ms. Scanlon. Okay. As I understand it, your testimony is 
that in a highly-concentrated market, that elimination of 
choices is what tends to drive prices up?
    Ms. Scurato. Correct.
    Ms. Scanlon. Okay. Mr. Shelton, you kindly attached Exhibit 
A to your testimony that has the distribution of Sprint and T-
Mobile's postpaid and prepaid stores in various regions and one 
of them that you have highlighted there is Philadelphia.
    Mr. Shelton. Yes.
    Ms. Scanlon. You have that? Does that also show there is 
fairly highly-concentrated Sprint and T-Mobile coverage and 
retail stores there?
    Mr. Shelton. Excuse me. I didn't hear you.
    Ms. Scanlon. Does your graph indicate with respect to the 
Philadelphia region and the concentration of T-Mobile and 
Sprint retail stores?
    Mr. Shelton. Yes.
    Ms. Scanlon. What is the impact in your estimation of the 
merger on retail workers if the merger goes through?
    Mr. Shelton. Well, obviously, as you can see, these stores 
are very close together in most of these places. Not only that, 
but as I said before, 84 percent of all their stores are owned 
by authorized dealers, owned, and operated by authorized 
dealers. So, when T-Mobile says that they are going to offer a 
job to employees, that doesn't mean anything to authorized 
dealers' employees and when you have this many stores, as I 
also said before, twice what AT&T or Verizon would have if this 
merger goes through, obviously they are going to get rid of 
some of those stores and those stores are probably going to be 
authorized dealer stores and the employees in those stores.
    Ms. Scanlon. Okay. Thank you. So, we do have these concerns 
about the impact on consumers that less competition could lead 
to higher prices and consolidation of stores could lead to less 
jobs.
    So, Mr. Legere, how are these four to three mergers so 
different from traditional mergers where we have the concern 
about lessening competition?
    Mr. Legere. Thank you very much for the question. I think I 
have tried to be very clear that going from two to three is 
going to increase competition. In cities that have a high 
concentration of share, we run this business on nationwide 
advertising, nationwide pricing. We don't price particularly 
down to a neighborhood and in the lower end of the market, when 
we bought Metro-PCS, where the main concern was the same, 
Metro-PCS customers had 12 times increase in the data usage and 
a four percent decline in price. So, the low end of the market 
has been a high beneficiary and we would expect that to be 
here.
    Mr. Shelton keeps talking about the authorized dealers. 
Boost, Virgin, and Metro are pretty much heavily concentrated 
in authorized dealers, and we have made it clear we are going 
to run these brands as businesses as the way they are now. We 
can't make job offers to employees that aren't ours, but we can 
run these businesses. We can segment the market so that Metro 
and Boost and Virgin all have a clear role to play, and with 
Sprint and T-Mobile stores, we can offer jobs to every person.
    Ms. Scanlon. I think Ms. Sohn was looking to respond.
    Ms. Sohn. Yes, this is not a two to three merger. This is a 
four to three merger. We don't have to have three equal-sized 
players to compete. A Sprint and T-Mobile--by the way, T-Mobile 
became T-Mobile after the Justice Department blocked the merger 
of AT&T and T-Mobile. That is when they became the un-carrier 
and wisely hired this man to my right.
    You know, they are mavericks. They not only compete with 
AT&T and Verizon, but they also compete with each other, and as 
we have seen not only in Europe and I don't know why Europe is 
different, it is actually smaller, so I would think that if you 
are shrinking from four to three in Europe and it is bad and 
you have double digit price raises, it is going to be worse in 
the United States.
    There is no Rule that says that everybody has got to be the 
same size and, in fact, three is an invitation to collude 
rather than compete.
    Mr. Legere. Can I make one final comment since the word 
``collude'' was used?
    Mr. Cicilline. The time has expired, but we are going to 
get back to you.
    I am going to go to Mr. Neguse from the great State of 
Colorado for five minutes.
    Mr. Neguse. Thank you, Mr. Chair.
    Mr. Claure, I want to talk a little bit about Mobile 
Virtual Network Operators. So, you can kind of correct me if I 
am wrong here. My understanding is that Sprint is one of the 
largest providers of roaming contracts in rural America. Is 
that a fair characterization?
    Mr. Claure. We provide it to both mobile--as you call it, 
MVNOs and to rural America. They are our customers.
    Mr. Neguse. So, I represent a district that is both urban 
and rural, quite a few rural counties in my district in the 
Second District in Colorado, and while I understand that T-
Mobile has made a commitment with respect to legacy rate plans 
for the New T-Mobile in terms of maintaining those plans for 
three years after the merger, am I correct that that commitment 
does not extend to MVNOs that currently rely on Sprint for 
wholesale service?
    Mr. Claure. So, I would let Mr. Legere answer that since he 
is going to be running the new company, but there is one 
enormous MVNO in the United States and that is a company called 
Tracfone. I think they have something liked 20 something 
million customers. Tracfone basically has endorsed this merger. 
They sent a letter saying this merger is good for consumers.
    Mr. Neguse. I understand that. I don't mean to interrupt 
you, Mr. Claure, but I guess I will just give it to Mr. Legere.
    I am trying to get to this question of whether that price 
commitment will extend to this piece of the market, since that 
piece is such a huge component of the ability for folks in 
rural America to be able to access.
    Mr. Legere. Thank you, Congressman. I will go even one step 
further.
    Not only will we honor the agreements that both Sprint and 
T-Mobile have, if there is any MVNO that is concerned about 
them not having the ability to get the rates that they have 
now, I will lock in a contract with any one of them that wants 
to take their rates now and lock it in for as long as they 
want.
    Prices are going to go down in that market, as well, 
especially since I can't think of an MVNO agreement where 
prices ever went up or stayed flat. For somebody who wants to 
lock it in, I am your guy. I will meet right out in the hallway 
here.
    Mr. Neguse. Thank you for your answer, Mr. Legere.
    Mr. Claure, I want to follow up--use the remaining time I 
must follow up on a question that my friend from North Dakota 
posed around kind of the reasoning for this merger, 
particularly as it relates to Sprint's standing in the market.
    My sense, based off what I have read, is you have made 
statements previously that the path that Sprint is on, is not 
sustainable in terms of the path forward. I think you 
referenced to the gentleman from North Dakota that Sprint would 
have to be a smaller company. Am I characterizing your 
statements accurately?
    Mr. Claure. That is correct.
    Mr. Neguse. Okay. So, what I am struggling to reconcile is 
from your January 31st, 2019, press release detailing the first 
quarter results in 2018 of Sprint, and I will just go through 
some of these.
    Postpaid service revenue grew year over year for the first 
time in five years. Prepaid service revenue grew year over year 
for the fifth consecutive year. Net operating income of 479 
million, 12th consecutive quarter of operating income, sixth 
consecutive quarter of net additions, 10th consecutive quarter 
of net additions in the business market.
    I mean, those don't sound like metrics of a company that 
would be getting smaller. It sounds like a company that is 
getting larger and maybe you can adduce.
    Mr. Claure. Sir, with all due respect, the only metric that 
matters in business is whether a business has the ability to 
generate cash or not and if you continue reading the press 
release, Sprint is expected to generate a negative free cash 
flow of a billion dollars this year.
    A company that doesn't generate free cash flow doesn't have 
the ability to invest. A company like Sprint has $40 billion in 
debt and the only way we can continue to invest is if we borrow 
more money and if we borrow more money, the only way to pay for 
it is we are going to have to increase prices and I have said 
that prior to this merger, the only way Sprint will continue is 
basically by increasing its prices.
    Mr. Neguse. Well,--
    Mr. Claure. Now just to finish, we do not--as I said, we 
are generating negative free cash flow. That means we spend 
more money than money that is coming into the company.
    Mr. Neguse. I am going to give the witness a chance to 
respond to that, but I would just follow up to say--and again 
part of this is just reconciling the statements that the 
company has made with respect to its financials with the 
justifications for the merger, because what I am trying to 
glean from your written testimony focused on the need to be 
able to make more capital investments, and yet in your press 
release, you talk about the fact that network investments year 
to year have doubled, which I understand were reduced 
drastically in the years prior, but nonetheless, are now on the 
rise.
    There has been a lot of conversation about 5G. I read a 
letter that Sprint issued in the New York Times just yesterday 
essentially to customers far and wide with respect to one of 
your competitors and in that letter, it made clear to me that 
the Sprint--its plan is to be the first carrier in the United 
States that has mobile 5G later this year. So, again, I am 
trying to understand that difference between the position of 
the company and your testimony.
    So, if you will indulge me to give the witness a chance to 
respond to that.
    Mr. Cicilline. The gentleman's time has expired, but the 
witness may answer the question.
    Mr. Claure. Great. So, we do plan to deploy 5G in a very 
limited area. We said it. It is specific cities around the 
country, but we do not have the capability to offer a true 
nationwide 5G because we lack low band spectrum to do it 
throughout the country.
    Now when you see the metrics that you see, yes, Sprint has 
been getting better. When we started Sprint in 2014, we used to 
lose $5 billion. Today's company is barely break even and 
generating minus $1 billion. So that limits our ability to 
invest going forward.
    Mr. Cicilline. Thank you.
    The chair now recognizes the gentle lady from Georgia, Ms. 
McBath, for five minutes.
    Mrs. McBath. Thank you and thank you to all that are here 
sharing your views on this proposed merger.
    We have heard a lot of talk today about the potential 
effects of this deal and obviously I am not an antitrust 
lawyer, but it doesn't take an antitrust lawyer to see that 
there are real reasons to be concerned about how this proposed 
merger might harm consumers and workers.
    Our economy relies on robust competition and my 
constituents in Georgia don't need a law degree to tell them 
the difference between having four phone plans to choose from 
or just three. You don't need an economist to tell you that a 
company doesn't need two phone stores on the same block or that 
if you work at one of those stores, it is about to close and 
that you are going to need a job, and as it was stated here 
earlier by the Communication Workers of America, they project 
that 28,900 jobs would be lost due to this merger.
    So, my question for you, Mr. Legere, is, on February 4th, 
T-Mobile committed to make available the same or better rate 
plans as those offered by T-Mobile or Sprint for three years. 
So why not four or five years, and why do we need this promise 
if this deal is to be such a good deal to consumers?
    Mr. Legere. Thank you very much for the question, and I am 
happy to explain that. My business plan has prices going down 
the whole time. The panel has said several times that our own 
modeling showed prices going up in the first three years. That 
is not true.
    What happened is the build-out of the network takes three 
years. An economist inserted price pressure in the first three 
years as a theory as to what could happen before the capacity 
would go up. That is not my business plan. So, what I decided 
to do is make the commitment to the FCC. I will keep every rate 
plan that everybody has and keep it for three years because at 
the three-year point when the capacity is significantly built, 
there was no question from all the theoretical economists about 
what would happen to price.
    Mrs. McBath. Ms. Sohn, do you have any response to that 
answer?
    Ms. Sohn. I want to repeat what I said earlier in my 
testimony, that this pricing commitment, which, as you 
mentioned, is good for a limited time only, is an admission 
that post-merger, there is not going to be enough competition 
in the wireless market to constrain price increases. He is 
basically saying I have got to do this. I have got to make this 
promise and I will get back to promises, promises. Who is going 
to enforce these vague promises?
    I will also make another point. After the February 4th 
letter several people filed with the FCC showing how many 
loopholes there were in this pricing commitment and T-Mobile 
had to file an eight-page letter explaining why this was simple 
and ironclad.
    Now if you have got to take eight pages to explain why your 
pricing commitment is ironclad, it ain't ironclad.
    Mrs. McBath. Thank you. Mr. Shelton, Sprint and T-Mobile 
have promised to offer employees new jobs if they are affected 
by a store closure.
    What kinds of jobs might those be and tell us from your 
research, what kinds of jobs would those individuals be asked 
to take?
    Mr. Shelton. There is no way to tell what kind of jobs they 
might be. There is no way to tell what kind of wages they might 
make. There is no way to tell where they are going to work. 
There is no way to tell where they will be forced to transfer 
to go to work, and we still have 88,000 people who work for 
authorized dealers that haven't been promised anything and 
those stores are going to close, mark my words.
    Mrs. McBath. Thank you so much. I would like to yield the 
rest of my time to Mr. Neguse.
    Mr. Neguse. I thank the gentle lady from Georgia.
    Ms. Sohn, if you care to opine on the kind of colloquy Mr. 
Claure and I had previously, I just wanted to give you a chance 
to be able to.
    Ms. Sohn. Thank you so much. So, it is true that in the 
third quarter of 2018, Sprint had negative cash flow of $908 
million but that is because they built up a large reserve of 
cash and now they are spending it on CAP-X. They spent $1.4 
billion in the immediate prior quarter--oh, excuse me. They 
spent $1.4 billion on their network in the third quarter. That 
is why they had negative cash flow. In fact, in the prior 
quarter, so Q2, Sprint had positive cash flow of $525 million.
    Let me say one other thing. Nobody has talked about 
SoftBank. SoftBank is like overflowing with money. It has got 
$31 billion in cash and cash equivalence across its portfolio. 
Its Vision Fund has more than $90 billion in capital which it 
invests in cutting edge technology companies and there is more 
on the way. They are going to have an IPO of their Japanese 
Mobile Division and they are listing the offering at $30 
billion. So, there is money there. It just needs to be spent.
    Mr. Neguse. I yield back.
    Mr. Legere. Can I reply now?
    Mr. Cicilline. The time of the gentleman has expired. I am 
going to recognize myself for five minutes.
    So, I want to start with, there has been a suggestion 
somehow, and I wasn't good in math, but there has been a 
suggestion that we are going from two to three, which just 
seems to me a really silly claim.
    I mean, T-Mobile currently represents 18 percent of the 
market and Sprint represents 14 percent of the market. That, 
going from two to three, acts as if those are non-existent 
players in the market and it seems to me that this is clearly 
not true. This is a very substantial part of the market and so 
I think you need to be honest.
    This is a transaction that takes four companies and makes 
it three, and the other question is, what is the impact on 
consumers and workers and costs, from my perspective.
    So, I want to start with, first, there has been a lot of 
discussion about the projected impact on consumers in terms of 
costs, and I take Mr. Legere at his word that he intends as CEO 
to keep costs down for the first three years, but, of course, 
this is not just something decided by a single individual. 
There is a market that will have some impact on whether that 
happens or not.
    You have shareholders that you are responsible to and you 
simply can't say, look, I am just going to keep my prices 
lower, and we are going to lose money because I want to do that 
personally. There are a bunch of duties you have, fiduciary 
duties, and market conditions, and what I really want to focus 
on is the testimony of Ms. Scurato, who references testimony 
from T-Mobile's economist, a firm called Cornerstone, that 
acknowledged that price increases are likely and that that was 
referenced in the DISH filing.
    So, I want to start really with you, Ms. Scurato. It seems 
like that was a conclusion that is consistent with other 
history in this sector and the reduction from four to three. 
Would you just explain a little bit about their response, and 
then I want to ask Mr. Legere to respond?
    Ms. Scurato. Sure. Thank you. So, in the Cornerstone study, 
it actually speculates that lower-income customers may be more 
willing to pay for better service than higher-income customers 
because they rely on smart phones for their only access to the 
internet. So that is part of the Cornerstone study, and again, 
DISH's economist, when looking at this study, they have 
concluded that Sprint and T-Mobile's own economists have 
predicted significant price increases and that those harms are 
going to disproportionately impact low-income consumers.
    Mr. Cicilline. So, Mr. Legere, I applaud both T-Mobile and 
Sprint have been, most people would recognize, scrappy, 
aggressive players in this market and it has resulted in maybe 
not better experiences for workers, according to Mr. Shelton, 
but at least better experiences for consumers, lower costs, 
more innovation, more choices. That is what competition is 
intended to promote.
    So, it is hard to understand, both in terms of your own 
economic conclusions of your economists that prices are going 
to go up and what we know about antitrust law and competition 
broadly, that less companies is less competition which produces 
higher prices. Why isn't this presumptively anticompetitive and 
not in the best interests of consumers, American jobs, or 
prices? It seems kind of--
    Mr. Legere. Thank you, Mr. Chair. Several things. You did 
refer in the beginning in your comments about being a CEO with 
a fiduciary obligation to shareholders, and I made it very 
clear that the business plan that I have shown to shareholders, 
that I have taken to rating agencies, has price declines from 
day one down.
    Not what we keep hearing about here is giving credence to 
DISH doing economic modeling.
    Mr. Cicilline. It is not--I am sorry to interrupt, but it 
is not DISH doing it. It is your economists, a firm called 
Cornerstone.
    Mr. Legere. DISH's interpretation. I will tell you one of 
the reasons that the FCC shot clock is currently stopped is 
that we provided tremendous amount more information about the 
years '19 to '21 because this was such a question.
    Prices are going down and, sir, if you will give me that 
chance on the collusion comment because she made it, if I can 
just make this comment,--
    Mr. Cicilline. Sure.
    Mr. Legere. --which was, T-Mobile's done a great job as a 
young carrier, but it didn't just come with hard work. We got 
$3 billion worth of cash and spectrum from the AT&T breakup and 
we did a merger with Metro-PCS. So sometimes those things are 
required.
    The un-carrier's brand is all about taking it to AT&T and 
Verizon. Those two wouldn't even speak to me if I was in a dark 
room alone with them and the whole brand--
    Mr. Cicilline. Mr. Legere, I understand that. Our goal here 
is not whether you get to take it to AT&T and Verizon. Our goal 
in deciding whether this merger makes sense, is in the public 
interests, is if it is good for consumers, it is good for 
American jobs, and whether it will result in more choice and 
lower prices. So, I get the sort of competition view as the CEO 
of the company, but that is actually not part of the equation.
    The equation really from my view is does it produce more 
choice, more competition, and lower prices for consumers?
    Mr. Legere. Which it has, sir, in the years that I have 
been CEO of the 75,000 jobs--
    Mr. Cicilline. No, I understand. I guess the other thing I 
want to ask is you keep saying this three-year window. So, I 
take it that even you aren't able to make a representation that 
after this three years--
    Mr. Legere. Prices are going down.
    Mr. Cicilline. Forever?
    Mr. Legere. Prices are going down.
    Mr. Cicilline. But forever.
    Mr. Legere. Business plan for the entirety of this plan.
    Mr. Cicilline. Forever?
    Okay. That doesn't seem credible to me. Forever, you are 
not going to be there forever. I guess that is what was 
worrisome to me, is I don't think we should be looking at 
transactions like this and basing an approval or disapproval on 
your personal judgment or assessment that you are going to 
behave in a certain way as--
    Mr. Legere. From here to 2024, there is going to be an 
eight-fold increase in capacity. There is going to be an 87 
percent decline, and the unit cost is going to go up.
    Mr. Cicilline. I got that.
    Mr. Legere. They are going to have 10 times more data, six 
percent decline.
    Mr. Cicilline. So, I am going to just indulge myself for a 
couple minutes.
    Ms. Sohn, could you respond to this idea? I know in your 
testimony you spoke about the representations that were made by 
T-Mobile and Sprint to Wall Street and how that ought to be 
relied upon, but also how it conflicts with your own analysis 
of this, and then I have one final question for Mr. Shelton.
    Ms. Sohn. Yes, thank you. I mean, look, it is axiomatic 
that companies seeking to merge will tell Wall Street that 
everything is wonderful and tell DC that everything is falling 
apart, and we talked about that specifically with Sprint and 
Mr. Neguse which did a really great job of talking about how 
2018 was a banner year and the third quarter we delivered solid 
financials.
    Mr. Legere. That would be a leap.
    Ms. Sohn. That is just one example, also, we didn't talk 
about the 5G because the promise of 5G, which both companies 
have been making, that is not merger-specific.
    Both companies have been promising pre-merger a nationwide 
5G network. That is what they have been telling Wall Street. 
Now they are going to tell you it is deeper, stronger, bigger 
use your adjective, but that is what they have been telling 
Wall Street before this merger was concerned.
    Mr. Legere. Both totally false.
    Ms. Sohn. If I could, Mr. Legere , I wouldn't mind just 
finishing. I think it is important to note that both are 
putting their money where their mouths are.
    They are committing $5 to $6 billion annually until 2020. 
That pretty much equals--comes pretty damn close to the $$0 
billion that they talk about if this merger is consummated.
    One last point, if I could. There is so much talk about the 
race to 5G, the race to 5G. Well, ask AT&T, ask Chair Pai, who 
I rarely agree with, and ask ABI Research, which is a leading 
research company in this space, and they all say the U.S. is 
winning. They are going to win, and they are going to be 
winning it at least for the next two years.
    So, I would not worry, Mr. Armstrong, about losing a race 
to 5G because we are winning because these companies are 
investing boatloads of money.
    Mr. Legere. Mr. Chair, I just have to say I find the 
comments that were made about public company CEOs saying 
whatever they need to say to Wall Street markets being 
insulting. It is a legal obligation we have to say exactly what 
is taking place in the business, and the 5G integration of the 
two companies is dramatically different than what--
    Mr. Cicilline. I understand that. I think we are trying to 
reconcile two very different presentations.
    I want to just ask Mr. Shelton. You have made reference to 
the impact of this transaction on jobs and particularly you 
made reference to people being unrepresented in these 
companies, and I will disclose my own bias, that I think we can 
see clearly, that when people are represented by a union, they 
earn better wages and better benefits, and we don't want to 
just preserve jobs. We want to preserve good-paying family-
supporting jobs.
    So, I wonder if you would just, as my final question, talk 
about what is the impact on jobs and your assessment--I know 
there is an assessment that was done by economists for CWA that 
demonstrates significant job loss and that the aggregate may be 
as much as $543 million in losses to workers.
    I think one of the big priorities of this Committee and 
this Congress is doing everything we can to protect good-paying 
American jobs, and if you could speak a little bit on that, I 
will give Mr. Legere an opportunity to respond.
    Mr. Shelton. First, on the jobs, we believe that there will 
be 30,000 jobs lost if this merger goes through. We are not 
alone in that. There are some Wall Street firms that maybe not 
30,000 but 20,000 jobs will be lost if this merger goes 
through.
    The merger is based on $43 billion in synergies. Synergies, 
as everybody knows, is a euphemism for job cuts and what is 
going to happen in these stores if this merger goes through is 
absolutely job cuts, because they are not going to be able to 
live with stores across the street from each other all over the 
country when they will have twice the stores that AT&T or 
Verizon has. It is just not going to happen and to believe that 
it is going to happen, I have a nice bridge I would like to 
sell you in New York.
    Mr. Cicilline. Thank you. Mr. Legere.
    Mr. Legere. Yeah. Thank you. Again, as it has been all day, 
bad assumptions, bad math.
    Mr. Shelton should be ashamed of himself with some of 
these--
    Mr. Cicilline. I will ask you to refrain from comments like 
that.
    Mr. Legere. Yeah. I withdraw that statement, but I would 
say T-Mobile, every single employee is a shareholder. I give 
them stock every year. They are all owners. We have won every 
award as the top places to work in America and that is because 
of the way we treat our employees.
    Our employees have the right to unionize if they choose 
and, in fact, one of our stores has, but the rest have 
significantly found that the relationship with--
    Mr. Cicilline. So, Mr. Legere, as you sit here today, Mr. 
Claure, would you be willing to commit as part of this 
transaction to not interfere with efforts by your employees to 
organize?
    Mr. Legere. We don't interfere.
    Mr. Claure. We don't do it today. Our employees have made 
their choice that they don't want to be part of a union, but 
that has always been an option.
    I want to add one last thing since I have not had a chance. 
It is crazy to say that we are going to fire 30,000 people. 
Sprint has 28,000 people. Do the math.
    Number 1, It is absolutely impossible.
    Number 2, the gentleman to my left, I appreciate what you 
do in terms of protecting the American workers. You are 
contractually obligated to support AT&T, and it is AT&T behind 
this to try to block this merger because they know what is 
going to come.
    Third, I don't appreciate the comments, the bullying 
intimidation tactics, what you said. We don't. When employees 
come to work, they like working for Sprint and T-Mobile, and 
what John said is perfectly fine. Talk to employers in America. 
So, that is pretty much the fact. But saying that we are going 
to take out 28,000 employees or 30,000 employees, that is 
irresponsible because this causes fear among our employees who 
are watching right now, who know that it is absolutely not 
true.
    Mr. Cicilline. Mr. Shelton, you want to respond before I 
ask my very last question?
    Mr. Shelton. Thank you, Mr. Cicilline. They keep using the 
word ``employees'' and they are going to--there is no doubt--
there can't be any doubt in anybody's mind they are going to 
take these authorized dealers and they are going to slash and 
burn and those are American jobs that they are going to cut and 
they are going to cut 30,000 of those jobs and as far as Sprint 
and T-Mobile employees or at least T-Mobile employees being 
able to join unions, because that is what Mr. Legere just said, 
they went as far and have been found guilty of forming a 
company union to stop the union from organizing people at T-
Mobile and that hasn't been done in this country since the 
1930s. So, that is how much they are against their employees 
becoming unionized.
    Mr. Cicilline. Thank you, Mr. Shelton.
    I am going to ask unanimous consent that a number of 
letters, both in support and opposition to the merger, be made 
a part of this record, and also a letter that I received and 
Ranking Member received from freeconferencecall.com, Mr. 
Erikson.
    [The information follows:]

                      MR. CICILLINE FOR THE RECORD

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    Mr. Cicilline. Mr. Legere, I have actually heard this 
concern from a number of people about whether or not these free 
conference call programs are still going to be available 
because, I guess, currently they are considered out of plan 
with T-Mobile, and there is a lot of anxiety about whether in a 
merged company that kind of service would still be available. I 
don't know if you are in a position to answer that, but--
    Mr. Legere. I will follow up.
    Mr. Cicilline. Great. I will be sure to provide you a copy 
of the correspondence we got.
    Thank you all. I know this has been a long hearing, but it 
has been incredibly informative, and I think particularly 
helpful to Members of the committee. You have nothing else, Mr. 
Armstrong? With that, we will adjourn the hearing and again 
thank you to the witnesses.
    [Whereupon, at 5:24 p.m., the Subcommittee was adjourned.]

                                APPENDIX

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                  QUESTIONS AND ANSWERS FOR THE RECORD

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